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A department's three-variance overhead standard costing system reported unfavorable spending and volume variances. The activity level selected for allocating overhead to the product was based on 80% of practical capacity. If 100% of practical capacity had been selected instead, how would the reported unfavorable spending and volume variances be affected?

Spending variance Volume variance

a. Increased Unchanged

b. Increased Increased

c. Unchanged Increased

d. Unchanged Unchanged

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