i Data Table Gammaro Company Income Statements for the Year Ended December 31, 2017 Variable Absorption Costing Costing $ 8,850,000 $ 8,850,000 Revenues 5,845,000 4,685,000 1,350,000 Cost of goods sold (at standard costs) Fixed manufacturing overhead (budgeted) Fixed manufacturing overhead variances (all unfavorable): Spending Production volume 75,000 Total marketing and administrative costs (all fixed) 75,000 405,000 1,575,000 7,900,000 950,000 1,575,000 7,685,000 1,165,000 $ Total costs $ Operating income Inventories (at standard costs) December 31, 2016 December 31, 2017 $ 1,365,000 $ 1,695,000 80,000 195,000 Print Print Done Done Gammaro Company uses standard costing. Tim Smith, the new president of Gammaro 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.) = % of denominator level Requirement 2. How much fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing? Determine the formula, then compute how much of fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing. (Abbreviation used: "mfg" = manufacturing.) Fixed mfg overhead in inventory 2016 2017 Requirement 3. Reconcile and explain the difference in 2017 operating incomes under variable and absorption costing. Begin by determining the formula that will highlight the difference between the operating income under each method, then complete the equation for 2017. (Abbreviations used: "var." = Variable, "mfg" = manufacturing, "beg." = beginning, "end" = ending.) Absorption-costing Variable-costing operating income - operating income = 2017 The difference between absorption and variable costing is due solely to moving when the inventories were in 2017. Requirement 4. Tim Smith 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. During 2017, Gammaro experienced a in inventory levels as a result of The Under absorption costing, operating income is a function of end result was that much of i Data Table Gammaro Company Income Statements for the Year Ended December 31, 2017 Variable Absorption Costing Costing $ 8,850,000 $ 8,850,000 Revenues 5,845,000 4,685,000 1,350,000 Cost of goods sold (at standard costs) Fixed manufacturing overhead (budgeted) Fixed manufacturing overhead variances (all unfavorable): Spending Production volume 75,000 Total marketing and administrative costs (all fixed) 75,000 405,000 1,575,000 7,900,000 950,000 1,575,000 7,685,000 1,165,000 $ Total costs $ Operating income Inventories (at standard costs) December 31, 2016 December 31, 2017 $ 1,365,000 $ 1,695,000 80,000 195,000 Print Print Done Done Gammaro Company uses standard costing. Tim Smith, the new president of Gammaro 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.) = % of denominator level Requirement 2. How much fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing? Determine the formula, then compute how much of fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing. (Abbreviation used: "mfg" = manufacturing.) Fixed mfg overhead in inventory 2016 2017 Requirement 3. Reconcile and explain the difference in 2017 operating incomes under variable and absorption costing. Begin by determining the formula that will highlight the difference between the operating income under each method, then complete the equation for 2017. (Abbreviations used: "var." = Variable, "mfg" = manufacturing, "beg." = beginning, "end" = ending.) Absorption-costing Variable-costing operating income - operating income = 2017 The difference between absorption and variable costing is due solely to moving when the inventories were in 2017. Requirement 4. Tim Smith 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. During 2017, Gammaro experienced a in inventory levels as a result of The Under absorption costing, operating income is a function of end result was that much of