Please complete only Requirement 3 and include a Practical, Normal, and Master Budget Colum following the Theoretical Layout. The information for requirement 3 is given below 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 $2.70 per bulb. Fixed manufacturing costs are $1,170,000 per year. Variable and fixed selling and administrative expenses are $0.30 per bulb sold and $200,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers, EBL can sell the bulbs for $9.40 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.) Read the requirements. Requirements Data table 1. Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit. 2. Suppose EBL actually produces 300,000 bulbs. Calculate the production-volume variance using each level of capacity to compute the fixed manufacturing overhead allocation rate. 3. Assume EBL has no beginning inventory. If this year's actual sales are 225,000 bulbs (and production is 300,000 bulbs), calculate operating income for EBL using each type of capacity to compute fixed manufacturing cost per unit. Print Done costi Theoretical capacity Practical capacity Normal capacity 900,000 bulbs 520,000 bulbs 260,000 bulbs (average expected output for the next 3 years) Master-budget capacity 225,000 bulbs expected production this year Print Done Requirement 1. Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit. Begin by determining the formula to calculate the inventoriable cost per unit (Abbreviations used: mfg = manufacturing, admin. = administration.) Fixed mig overhead rate Variable production cost Now calculate the inventoriable cost per unit at each level of capacity. Inventoriable Capacity type cost per unit Theoretical $ 4.00 Practical $ 4.95 Normal $ 7.20 Master Budget S 7.90 Inventoriable cost per unit Requirement 2. Suppose EBL actually produces 300,000 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.) Total fixed mig overhead -( Fixed mfg overhead rate x Actual production Production-volume variance Next calculate the production-volume variance at each level of capacity. Label each variance as favorable (F) or unfavorable (U). Capacity type $ $ Production volume-variance 780,000 U 495,000 U $ 180,000 F Theoretical Practical Normal Master-Budget $ 390,000 F Requirement 3. Assume EBL has no beginning inventory. If this year's actual sales are 225,000 bulbs (and production is 300,000 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). Revenue Less: Cost of goods sold Production-volume variance Gross margin Theoretical 2115000 (780,000) U Variable selling Fixed soiling Operating income Make sure to also add Practical, Normal, Master Budget columns and their respective calculation following the same layout as theoretical that is given.