When Machine-Hours Are Used as an Overhead Cost-Allocation Base and the Unexpected

When machine-hours are used as an overhead cost-allocation base and the unexpected purchase of a new machine results in fewer expenditures for machine maintenance,the MOST likely result would be to report a(n) :

A) unfavourable variable overhead efficiency variance.
B) unfavourable production-volume variance.
C) favourable variable overhead spending variance.
D) favourable fixed overhead flexible-budget variance.

Correct Answer:

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