ou work in the Strategy Analysis department of On$-$Call, a worldwide paging firm offering satellite$-$based digital communications through sophisticated pagers. On$-$Call is analyzing the possibility of acquiring AtlantiCom, an East Coast paging firm in Maine.

AtlantiCom$$s latest quarterly report disclosed an unfavorable volume variance of $$1\mathrm{.}3$ million. The engineering staff of On$-$Call, familiar with AtlantiCom$$s network, estimates that AtlantiCom has quarterly fixed overhead costs of $$6\mathrm{.}5$ million that can deliver $800,000$ message packets per quarter. A message packet is the industry standard of delivering a fixed amount of digital information within a given time period.

In valuing AtlantiCom, senior management at On$-$Call wants to know whether AtlantiCom has excess capacity, and, if so$,$ how much.

Required:

As a percentage of AtlantiCom$$s current capacity of $800,000$ message packets, estimate AtlantiCom$$s over$-$ or undercapacity last quarter. Assume that the quarterly fixed overhead costs of $$6\mathrm{.}5$ million approximate budgeted fixed overhead and that actual and standard volumes are the same.