cost accounting ch 9

Learning: Inventory Costing and capacity Analysis QUESTION Brookville Company has provided the following data for the previous year: 5.000 units S40 S8 Units sold during the previous year Selling price per unit Direct materials per unit Direct manufacturing labor per unit Variable manufacturing overhead per unit Fixed manufacturing costs Budgeted production at the beginning of the year Number of units in opening inventory Number of units in ending inventory $4 $32.000 5.000 units O unit 1.000 units The CEO of the company is of the opinion that the budgeted fixed manufacturing cost should be allocated on the basis of master-budget capacity utilization. However, the finance controller is of the opinion that budgeted fixed manufacturing cost should be allocated on the basis of practical capacity of 8.000 units. Which of the following statements is most likely to be true for Brookville Company