Identifying favourable and unfavourable variances. Purdue Inc. manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours.

REQURIED For each independent scenario given, indicate whether each of the manufacturing variances will be favourable or unfavourable or, in case of insufficient information, indicate “cannot be determined.”LO1

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Scenario Production output is 5% more than budgeted, and actual fixed manufacturing overhead costs are 6% more than budgeted Production output is 10% more than budgeted; actual machine-hours are 5% less than budgeted Production output is 8% less than budgeted Actual machine-hours are 15% greater than flexible-budget machine-hours Relative to the flexible budget, actual machine-hours are 10% greater, and actual variable manufacturing overhead costs are 15% greater Variable Variable Fixed Overhead Overhead Overhead Spending Efficiency Spending Variance Variance Variance Fixed Overhead Production- Volume Variance