Energy Glow Light (EGL), a producer of energy-efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, EGL has decided to evaluate its financial performance using absorption costing income. The production-volume variance is written off to cost of goods sold. The variable cost of production is $2.70 per bulb. Fixed manufacturing costs are $1,020,000 per year. Variable and fixed selling and administrative expenses are $0.20 per bulb sold and $290,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers, EGL can sell the bulbs for $9.60 each. EGL is deciding among various concepts of capacity for calculating the cost of each unit produced. Its choices are as follows: (Click the icon to view the capacity information.) Read the requirements Requirement 1. Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit Begin by determining the formula to calculate the inventoriable cost per unit. (Abbreviations used: mfg = manufacturing, admin. = administration.) Fixed mfg overhead rate Variable production cost Inventoriable cost per unit Now calculate the inventoriable cost per unit at each level of capacity - X Data table Inventoriable Capacity type cost per unit Theoretical Practical Theoretical capacity 850,000 bulbs Practical capacity 425,000 bulbs Normal capacity 272,000 bulbs (average expected output for the next 3 years) Master-budget capacity 212,500 bulbs expected production this year Normal Master Budget Print Done Help me solve this Etext pages Get more help Clear all Check