Assume that in calculating the denominator of an overhead rate, a company has a choice to use either maximum capacity or expected capacity. Choosing maximum capacity instead of expected capacity as the denominator will:

Group of answer choices

Reduce the overhead rate and generate more accurate efficiency variances.

Allow the firm to isolate excess capacity as a cost object.

Increase the overhead rate and generate less accurate price variances.

Increase the overhead rate and generate more accurate efficiency variances.

Increase the overhead rate and generate more accurate price variances.