es Smith Company uses standard costing. Tim Bentfield, the new president of Smith Company, is presented with the following data for 2017. (Click the icon to view the data.) Required Requirement 1. At what percentage of denominator level was the plant operating during 2017? Data Determine the formula, and then calculate at what percentage of denominator level the plant was operating during 2017. % of denominator level Required % - X Smith Company Income Statements for the Year Ended December 31, 2017 Variable Costing Absorption Costing Revenues Cost of goods sold (at standard costs) $ 8,850,000 $ 8,850,000 4,655,000 5,865,000 1,300,000 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 Bentfield 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. Fixed manufacturing overhead (budgeted) Fixed manufacturing overhead variances (all unfavourable): Spending Get more help Print Done X 115,000 115,000 Production volume 455,000 1,550,000 1,550,000 Total marketing and administrative costs (all fixed) Total costs 7,620,000 7,985,000 1,230,000 $ 865,000 Operating income Inventories (at standard costs) December 31, 2016 December 31, 2017 $ 1,200,000 $ 1,685,000 65,000 185,000 Print Done Clear a 27C Sunny