Need Help with Requirement 3 please. Thank you. 
Earth's Best Light (EBL), 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, EBL 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 $2.80 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 $260,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers, EBL can sell the bulbs for $9.80 each. EBL is deciding among various concepts of capacity for calculating the cost of each unit produced. Its choices are as follows: BE: (Click the icon to view the capacity Information.) Read the requirements i Data Table Requirement 1. Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit. Begin by deterrnining the formula to calculate the inventoriable cost per unit. (Abbreviations used: mfg = manufacturing, admin. = a Fixed mig overhead rate + Variable production cost = Inventoriable cost per unit Theoretical capacity Practical capacity Normal capacity Master-budget capacity 850,000 bulbs 425,000 bulbs 272,000 bulbs (average expected output for the next three years) 212,500 bulbs expected production this year Now calculate the inventoriable cost per unit at each level of capacity. Print Done Capacity type Theoretical Practical Normal Master Budget Inventoriable cost per unit S 4.00 S 5.20 S 6.55 S 7.60 Requirement 2. Suppose EBL actually produces 250,000 bulbs. Calculate the production-volume variance using each level of capacity to compute the fixed manufacturing overhead allocation rate. Determine the formula that is used to calculate the production-volume variance. (Abbreviation used: mfg = manufacturing.) Production-volume variance Total fixed mig overhead I Fixed mig overhead rale Actual production ) - Earth's Best Light (EBL), 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, EBL 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 $2.00 per bulb. Fixed manufacturing costs are S1,020,000 per year. Variable and fixed selling and administrative expenses are $0.20 per bulb sold and $260,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers, EBL can sell the bulbs for $9.80 each. EBL 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.) i Data Table Read the requirements. Text calculate the producuon-volumne variance at each level or capacity. Laber each variance as favorable For urnavorable (U). Production Theoretical capacity 850,000 bulbs Practical capacity 425,000 bulbs Capacity type volume-variance Normal capacity 272,000 bulbs (average expected output for the next three years) Theoretical $ 720,000 U Master-budget capacity 212,500 bulbs expected production this year Practical $ 420,000 U Normal $ 82,500 U Print Done Master-Budget $ 180,000 F Requirement 3. Assume EBL has no beginning inventory. If this year's actual sales are 212,500 bulbs, calculate operating income for EBL using each type of capacity to compute fixed manufacturing cost per unit. Calculate the operating income for each type of capacity. We will do the operating income calculations one at a time, beginning with theoretical. Label each variance as favorable (F) or unfavorable (U). Theoretical 2,082,500 $ Revenue Less: Cost of goods sold Production-volume variance Gross margin Variable selling Fixed selling Operating income Earth's Best Light (EBL), 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, EBL 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 $2.80 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 $260,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers, EBL can sell the bulbs for $9.80 each. EBL is deciding among various concepts of capacity for calculating the cost of each unit produced. Its choices are as follows: BE: (Click the icon to view the capacity Information.) Read the requirements i Data Table Requirement 1. Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit. Begin by deterrnining the formula to calculate the inventoriable cost per unit. (Abbreviations used: mfg = manufacturing, admin. = a Fixed mig overhead rate + Variable production cost = Inventoriable cost per unit Theoretical capacity Practical capacity Normal capacity Master-budget capacity 850,000 bulbs 425,000 bulbs 272,000 bulbs (average expected output for the next three years) 212,500 bulbs expected production this year Now calculate the inventoriable cost per unit at each level of capacity. Print Done Capacity type Theoretical Practical Normal Master Budget Inventoriable cost per unit S 4.00 S 5.20 S 6.55 S 7.60 Requirement 2. Suppose EBL actually produces 250,000 bulbs. Calculate the production-volume variance using each level of capacity to compute the fixed manufacturing overhead allocation rate. Determine the formula that is used to calculate the production-volume variance. (Abbreviation used: mfg = manufacturing.) Production-volume variance Total fixed mig overhead I Fixed mig overhead rale Actual production ) - Earth's Best Light (EBL), 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, EBL 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 $2.00 per bulb. Fixed manufacturing costs are S1,020,000 per year. Variable and fixed selling and administrative expenses are $0.20 per bulb sold and $260,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers, EBL can sell the bulbs for $9.80 each. EBL 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.) i Data Table Read the requirements. Text calculate the producuon-volumne variance at each level or capacity. Laber each variance as favorable For urnavorable (U). Production Theoretical capacity 850,000 bulbs Practical capacity 425,000 bulbs Capacity type volume-variance Normal capacity 272,000 bulbs (average expected output for the next three years) Theoretical $ 720,000 U Master-budget capacity 212,500 bulbs expected production this year Practical $ 420,000 U Normal $ 82,500 U Print Done Master-Budget $ 180,000 F Requirement 3. Assume EBL has no beginning inventory. If this year's actual sales are 212,500 bulbs, calculate operating income for EBL using each type of capacity to compute fixed manufacturing cost per unit. Calculate the operating income for each type of capacity. We will do the operating income calculations one at a time, beginning with theoretical. Label each variance as favorable (F) or unfavorable (U). Theoretical 2,082,500 $ Revenue Less: Cost of goods sold Production-volume variance Gross margin Variable selling Fixed selling Operating income
