When machine-hours are used as an overhead cost-allocation base, a rush order resulting in unplanned overtime that used less-skilled workers on the machines would most likely contribute to reporting a(n):
A)favorable variable overhead spending variance
B)unfavorable variable overhead efficiency variance
C)favorable fixed overhead flexible-budget variance
D)unfavorable production-volume variance

Question

Quizplus · Accepted Answer

Since machine-hours are the overhead cost allocation base, we would expect a higher use of machine-hours for a rush order resulting in unplanned overtime. However, the rush order used less-skilled workers, which means they were less efficient in using the machines, resulting in a higher machine-hours usage than planned (unfavorable efficiency variance).

When Machine-Hours Are Used as an Overhead Cost-Allocation Base, a Rush