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Super Lager has just purchased the Buffalo Brewery. The brewery is two years old and uses absorption costing. It will "sell its product to Super Lager at $43 per barrel. Peter Bryant, Super Lager's controller, obtains the following information about Buffalo Brewery's capacity and budgeted fixed manufacturing costs for 2017: (Click the icon to view the information) Read the requirements DH 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. = budgeted, MOH = manufacturing overhead. Round the rates to the nearest cent.) Budgeted fixed Budg, fixed MOH por period 1 Budg. denominator lovel (barrels) - MOH rate per barrel 27,700,000 Theoretical capacity Practical capacity 4,150,960 6.67 Modules You answered: 6.51 Get answer feedback 0 Data Table Budgeted Fixed Days of Hours of Denominator-Level Capacity Manufacturing Production Production Barrels per Concept Overhead per Period per Period per Day Hour Theoretical capacity $ 27,700,000 356 22 530 Practical capacity $ 27,700,000 340 20 495 Normal capacity utilization $ 27,700,000 340 20 400 Master-budget capacity utilization for each half year: (a) January-June 2017 13,850,000 170 20 340 (b) July-December 2017 $ 13,850,000 170 20 460 hel ral Print Done Requirements 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different. 2. In 2017, the Buffalo Brewery reported these production results: Beginning inventory in barrels, 1-1-2017 0 Production in barrels 2,650,000 Ending inventory in barrels, 12-31-2017 190,000 Actual variable manufacturing costs $ 80,560,000 Actual fixed manufacturing overhead costs $ 27,200,000 There are no variable cost variances. Fixed manufacturing overhead cost variances are written off to cost of goods sold in the period in which they occur. Compute the Buffalo Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Print Done