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Pearmain Lager has just purchased the Attanta Bcewery. The brewory is 2 years old and uses absorption costing. It will sell its product to Pearmain
Pearmain Lager has just purchased the Attanta Bcewery. The brewory is 2 years old and uses absorption costing. It will "sell its product to Pearmain Lager at $42 par barrel Peter Bryant. Pearmain Lnger's controller, obtains the following information about Atianta Brewerys capacity and budpeted foced manulacturing costs for 2020 (Click the icon to viow the intarmation.) Read the reavirements. Requirement 1, Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-tevel capacity concepts. Explain why they are dilforent. Begin by doterring the formula to calculate the budgeted fixed manufacturing overhead rase per barrol, then compute the rate for each of the donominator-level capacity concepts. (Abbreviations used: Budg = bodgeted, MOH= manutacturing overthead. Round the rates to the noarest cent.) Data table Requirements 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different. 2. In 2020, the Atlanta Brewery reported these production results: There are no variable cost variances. Fixed manufacturing overhead cost variances are written off to cost of goods sold in the period in which they occur. Compute the Atlanta Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization
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