Alderman Company uses standard costing. Tim St. Germaine, the new president of Alderman Company, is presented with the following data for 2017: (Click the icon to view the data.) Read the requirements. Requirement 1. At what percentage of denominator level was the plant operating during 2017? Determine the formula, then compute at what percentage of denominator level the plant was operating during 2017. (Abbreviation used: "mfg" = manufacturing.) Fixed mfg overhead allocated Budgeted fixed mfg overhead = % of denominator level 1,100,000 Data table 495,000 Alderman Company Income Statements for the Year Ended December 31, 2017 = Variable Costing Absorption Costing $ 9,250,000 $ 9,250,000 Revenues Cost of goods sold (at standard costs) 4,665,000 5,890,000 Fixed manufacturing overhead (budgeted) 1,100,000 0 Fixed manufacturing overhead variances (all unfavorable): Spending 90,000 90,000 Production volume 0 1,560,000 495,000 1,560,000 Total marketing and administrative costs (all fixed) 7,415,000 8,035,000 Total costs $ 1,835,000 $ 1,215,000 Operating income Inventories (at standard costs) December 31, 2016 940,000 $ 1,715,000 December 31, 2017 55,000 210,000 % Requirements - 1. At what percentage of denominator level was the plant operating during 2017? 2. How much fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing? 3. Reconcile and explain the difference in 2017 operating incomes under variable and absorption costing. 4. Tim St. Germaine is concerned: He notes that despite an increase in sales over 2016, 2017 operating income has actually declined under absorption costing. Explain how this occurred. Print Done vical all Check answer