When machine-hours are used as an overhead cost-allocation base, the LEAST likely cause of a unfavourable variable overhead rate variance is
A)excessive machine breakdowns.
B)the production scheduler inefficiently scheduled jobs.
C)poor coordination between sales and production resulting in displacement of normal batches by.rush orders and excessive setup times.
D)strengthened demand for the product.
E)a decrease in the cost of energy.

Question

Quizplus · Accepted Answer

A decrease in the cost of energy would result in a favorable variable overhead rate variance, not an unfavorable one. Excessive machine breakdowns (A), inefficient scheduling of jobs (B), poor coordination between sales and production (C), and strengthened demand for the product (D) can all lead to unfavorable variable overhead rate variances by increasing the amount of machine-hours required to complete production and thus increasing the variable overhead costs allocated to each unit of production.

When Machine-Hours Are Used as an Overhead Cost-Allocation Base, the LEAST