Denominator volume, production-volume variance. National Electronics, Inc., acquired plant assets based on forecasts of long-range demand for its products.

Its budgeted manufacturing overhead costs for 2007 are $12,600,000. Under each of the four alternative denominator-level capacity concepts, National’s capacity is Denominator-Level Denominator Level Capacity Concept (in machine-hours)

Theoretical capacity Practical capacity Normal capacity utilization Master-budgeted capacity utilization 2,100,000 1,500,000 1,312,500 1,000,000 362 CHAPTER 9 Required 1. Calculate budgeted fixed manufacturing overhead rate per machine-hour for each denominator-level capacity concept.

2. For 2007 actual output, 1,100,000 budgeted machine-hours were allowed. Compute production-volume variance under each of the denominator-level capacity concept assumptions.