3. Tolman Lager has just purchased the Cleveland Brewery. The brewery is two years old and uses absorption costing. It will "sell its product to Tolman Lager at $44 per barrel. Peter Bryant, Tolman Lagers controller, obtains the following information about Cleveland Brewery's capacity and budgeted fixed manufacturing costs for 2017 (Click the icon to view the information.) Read the requirements Requirement 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different. Begin by determing the formula to calculate the budgeted fixed manufacturing overhead rate per barrel, then compute the rate for each of the denominator-level capacity concepts. (Abbreviations used: Budg. overhead. Round the rates to the nearest cent.) budgeted, MOH- manufacturing Budgeted fixed MOH rate per barre (1) Budg, denominator level (barrels) Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity for each half year (a) January June 2017 (b) July December 2017 Explain why they are different concepts emphasize demand The (3)_ factors. concepts emphasize supply factors, while (4) The six-month rates for the master-budget utilization concept (5) Requirement 2. Compute the Cleveland Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Begin by completing the following table to help you compute the operating income for each denominator-level capacity concept. (Round the rates to the nearest cent.) Per barel Budgeted fixed Budgeted Budgeted MOH rate variable mfg total mfg Fixed MOH per barrel Denominator-level cost rate cost rate costs allocated capacity concept Theoretical capacity Practical capacity Normal capacity ubilization Now compute the operating income for each capacity concept, one at a time. Label the variances as favorable (F) or unfavorable (U).(Enter a "0* for any zero balance accounts.) Normal capacity Cost of goods sold Beginning inventory Variable manufacturing costs Fixed manufacturing overhead cost allocatecd Cost of goods available for sale Deduct ending inventory Adjustment for variances Cost of goods sold Gross margin Other costs Operating income 8: Data Table Budgeted FixedDays of Hours of Denominator-Level Manufacturing Production Production Barrels Overhead per Period $ 27,700,000 $ 27,700,000 S 27,700.000 per Period 360 350 350 per Day per Hour 600 490 395 Capacity Concept Theoretical capacity Practical capacity Normal capacity utlization Master-budget capacity for each half year (a) January June 2017 (b) July December 2017 20 $ 13,850,000 $13,850,000 320 175 175 20 470 9: Requirements 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-evel capacity concepts. Explain why they are diflerent 2. In 2017, the Cleveland Brewery reported these production results: Beginning inventory in barrels, 1-1-2017 Production in barrels Ending inventory in barrels, 12-31-2017 Actual variable manufacturing costs Actual fixed manufacturing overhead costs 2,580,000 230,000 $ 78,174,000 $27,200,000 There are no variable cost variances.Fixed manufacturing overhead cost variances are writhen off to cost of goods sold in the period in which they oocur. Compute the Cleveland Brewery's operating income when the denominator-level capacity s (a) theoretical capacity, (b) practical capacity, and (c) normal capacity ublization. 3. Tolman Lager has just purchased the Cleveland Brewery. The brewery is two years old and uses absorption costing. It will "sell its product to Tolman Lager at $44 per barrel. Peter Bryant, Tolman Lagers controller, obtains the following information about Cleveland Brewery's capacity and budgeted fixed manufacturing costs for 2017 (Click the icon to view the information.) Read the requirements Requirement 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different. Begin by determing the formula to calculate the budgeted fixed manufacturing overhead rate per barrel, then compute the rate for each of the denominator-level capacity concepts. (Abbreviations used: Budg. overhead. Round the rates to the nearest cent.) budgeted, MOH- manufacturing Budgeted fixed MOH rate per barre (1) Budg, denominator level (barrels) Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity for each half year (a) January June 2017 (b) July December 2017 Explain why they are different concepts emphasize demand The (3)_ factors. concepts emphasize supply factors, while (4) The six-month rates for the master-budget utilization concept (5) Requirement 2. Compute the Cleveland Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Begin by completing the following table to help you compute the operating income for each denominator-level capacity concept. (Round the rates to the nearest cent.) Per barel Budgeted fixed Budgeted Budgeted MOH rate variable mfg total mfg Fixed MOH per barrel Denominator-level cost rate cost rate costs allocated capacity concept Theoretical capacity Practical capacity Normal capacity ubilization Now compute the operating income for each capacity concept, one at a time. Label the variances as favorable (F) or unfavorable (U).(Enter a "0* for any zero balance accounts.) Normal capacity Cost of goods sold Beginning inventory Variable manufacturing costs Fixed manufacturing overhead cost allocatecd Cost of goods available for sale Deduct ending inventory Adjustment for variances Cost of goods sold Gross margin Other costs Operating income 8: Data Table Budgeted FixedDays of Hours of Denominator-Level Manufacturing Production Production Barrels Overhead per Period $ 27,700,000 $ 27,700,000 S 27,700.000 per Period 360 350 350 per Day per Hour 600 490 395 Capacity Concept Theoretical capacity Practical capacity Normal capacity utlization Master-budget capacity for each half year (a) January June 2017 (b) July December 2017 20 $ 13,850,000 $13,850,000 320 175 175 20 470 9: Requirements 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-evel capacity concepts. Explain why they are diflerent 2. In 2017, the Cleveland Brewery reported these production results: Beginning inventory in barrels, 1-1-2017 Production in barrels Ending inventory in barrels, 12-31-2017 Actual variable manufacturing costs Actual fixed manufacturing overhead costs 2,580,000 230,000 $ 78,174,000 $27,200,000 There are no variable cost variances.Fixed manufacturing overhead cost variances are writhen off to cost of goods sold in the period in which they oocur. Compute the Cleveland Brewery's operating income when the denominator-level capacity s (a) theoretical capacity, (b) practical capacity, and (c) normal capacity ublization