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Selected operating information on three different companies for a recent year is shown below: Company A B C Full-capacity MHs 15,000 27,000 30,000 Budgeted MHs* 12,500 25,000 30,000 Actual MHs 12,500 26,000 28,000 Standard MHs allowed for actual production 13,000 23,000 30,000 *Denominator activity level for computing the predetermined overhead rate Required: For each company, state whether the company would have a favourable or unfavourable volume variance
Selected operating information on three different companies for a recent year is shown below:
Company
A B C
Full-capacity MHs 15,000 27,000 30,000 Budgeted MHs* 12,500 25,000 30,000 Actual MHs 12,500 26,000 28,000 Standard MHs allowed for actual production 13,000 23,000 30,000
*Denominator activity level for computing the predetermined overhead rate
Required: For each company, state whether the company would have a favourable or unfavourable volume variance. (Select "None" if no volume variance apply for a particular company.)
Volume Variance
Company A Company B Company C
Expert Solution
Company A has favorable volume variance as standard hours allowed for the actual production are more than the denominator hours.
Company B has unfavorable volume variance as standard hours allowed for the actual production are less than the denominator hours.
Company C has no variance as standard hours and denominator hours are same.
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