EXERCISE 9A–5 Fixed Overhead Variances [LO5]

Selected operating information on three different companies for a recent year is given below:

Company A B C Full-capacity machine-hours ......................... 10,000 18,000 20,000 Budgeted machine-hours* ............................. 9,000 17,000 20,000 Actual machine-hours ................................... 9,000 17,800 19,000 Standard machine-hours allowed for actual production ................................. 9,500 16,000 20,000

*Denominator activity for computing the predetermined overhead rate.

Required:

For each company, state whether the company would have a favorable or unfavorable volume variance and why.