Now compute the operating income for each capacity concept, one at a time. Label the variances as favorable (F) or unfavorable (U). (Enter a "0" for any zero balance accounts.

Zing Lager has just purchased the Boise Brewery. The brewery is two years old and uses absorption costing. It will "sell" its product to Zing Lager at $ 48 per barrel. Peter Bryant, Zing Lager's controller, obtains the following information about Boise Brewery's capacity and budgeted fixed manufacturing costs for 2017:

Denominator-Level Capacity Concept	Budgeted Fixed Manufacturing Overhead Per Period	Days of production per period	Hours of production per period	Barrels per hour
Theoretical capacity	$27,800,000	356	22	600
Practical capacity	$27,800,000	350	20	490
Normal capacity utilization	$27,800,000	350	20	395
Master Budget capacity for each half year
January June 2017	$13,900,000	175	20	330
July-December 2017	$13,900,000	175	20	460

2. In 2017, the Boise Brewery reported these production results:

Beginning inventory in barrels, 1-1-2017	0
Production in barrels	2,650,000
Ending inventory in barrels, 12-31-2017	230,000
Actual variable manufacturing costs	$80,692,500
Actual fixed manufacturing overhead costs	$27,000,000