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income. Lucky Lac 9-32 Alternative denominator-level capacity concepts, effect on operating will sell its product to Lucky Lager at $45 per barrel. Paul Brandon, Lucky
income. Lucky Lac 9-32 Alternative denominator-level capacity concepts, effect on operating will "sell its product to Lucky Lager at $45 per barrel. Paul Brandon, Lucky Lager's controller, obta the as just purchased the Austin Brewery. The brewery is two years old and uses absorption costing. following information about Austin Brewery's capacity and budgeted fixed manufacturing c for 2012 osts ert Page Layout Formulas Data Review View Hours of Days of Manufacturing Producti 360 350 Budgeted Fixed on Production Barrels Overhead per Period per Period per Dayper Hour Denominator-Level 3 C Capacity Concep 24 20 20 540 Theoretical capacity 5 Practical capacty 6 Normal capacity utilization $28,000,000 28,000,000 $28,000,000 4 400 Master-budget capacity for each 7 half year 8 (a) January-June 2012 9 (b) July-December 2012 $14,000,000 $14,000,000 175 175 20 20 320 480 Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different 1. 2. In 2012, the Austin Brewery reported these production results: Home Insert Page Layout Formulas 12 Beginning inventory in barrels, 1-1-2012 13 Production in barrels 2,600,000 200,000 $78,520,000 $27,088,000 14 Ending inventory in barrels, 12-31-2012 Actual variable manufacturingcosts 16Actual fixed manufacturing overhead costs There are cost o when the denominator-level capacity is (a) theoretical capacity, (b) practic capacity utilization. no variable cost variances. Fixed manufacturing overhead cost variances are written off to f goods sold in the period in which they occur. Compute the Austin Brewery's operating income al capacity, and (c) normal
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