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Dori Castings is a job order shop that uses a standard cost system to account for its production costs. Manufacturing overhead costs are applied to production on the basis of direct labour hours.

Dori's choice of a production volume as a denominator for calculating its predetermined overhead rate will have NO effect on which of the following?

Multiple Choice

• The fixed portion of this rate, which is used for applying costs to production.
• The variable portion of this rate, which is used for applying costs to production.
• The fixed overhead budget variance.
• The fixed overhead volume variance.