Please complete requirement 3.
= Homework: Chapter 9 Exercises Question 4, P9-42 (simil... Part 5 of 8 HW Score: 7.73%, 1.55 of 20 points Points: 0.9 of 4 O Save Global Best Light (GBL), 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, GBL 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 $2.40 per bulb. Fixed manufacturing costs are $1,160,000 per year. Variable and fixed selling and administrative expenses are $0.25 per bulb sold and $230,000, respectively. Because its light bulbs are currently popular with environmentally conscious customers. GBL can sell the bulbs for $9.80 each. GBL 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.) x Read the requirements Requirements .... Determine the formula that is used to calculate the production-volume variance. (Abbreviation used: mfg = manufacturing.) Production-volume 1. Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit. 2. Suppose GBL actually produces 250,000 bulbs. Calculate the production-volume variance using each level of capacity to compute the fixed manufacturing overhead allocation rate. 3. Assume GBL has no beginning inventory. If this year's actual sales are 200,000 bulbs, calculate operating income for GBL using each type of capacity to compute fixed manufacturing cost per unit. Total fixed mfg overhead - Fixed mfg overhead rate Actual production variance Next calculate the production-volume variance at each level of capacity. Label each variance as favorable (F) or unfavorable (U). Production Capacity type Theoretical Practical Normal volume-variance $ 797,500U $ 435,000 U $ 160.000 U $ F Print Done Master-Budget 290,000 Requirement 3. Assume GBL has no beginning inventory. If this year's actual sales are 200,000 bulbs, calculate operating income for GBL 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 - Data table Revenue Less: Cost of goods sold Production-volume variance Gross margin Variable selling Fixed selling Theoretical capacity 800,000 bulbs Practical capacity 400,000 bulbs Normal capacity 290,000 bulbs (average expected output for the next three years) Master-budget capacity 200,000 bulbs expected production this year Operating income
