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Please help with The Theoretical Capacity for Requirement 2 and labeling variances as (F) or (U) Zing Lager has just purchased the Buffalo Brewery. The
Please help with The Theoretical Capacity for Requirement 2 and labeling variances as (F) or (U)
Zing Lager has just purchased the Buffalo Brewery. The brewery is two years old and uses absorption costing. It will "sel its product to Zing Lager at $46 per barrel. Peter Bryant, Zing Lager's controller, obtains the following information about Buffalo Brewery's capadty and budgeted fixed manufacturing costs for 2017: E ( Click the icon to view the information.) Read the requirements Compute the budgeted fixed manufacturing averhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different Requirement Begin by determing the formula to calculate the budgeted fixed manufacturing overhead rate per barrel, then compute the rate for each of the denominator-level capacity concepts. (Abbreviations used: Budg. budgeted, MOH manufacturing overhead. Round the rates to the nearest cent.) Beund Budgeted fixed Budg. denominator level (barrels) Budg. fixed MOH per period MOH rate per barrel 5,126,400 $ 5.48 Theoretical capacity 28,100,000 3,681,600 S 28,100,000 Practical capacity 7.63 28,100,000 2,761,200 S 10.18 Normal capacily uilization Master-budget capacity for each half year 1,203,600 $ (a) January -June 2017 14,050,000 11.67 14.050,000 / 1,557,600S (b) July December 2017 S 9.02 Explain why they are different The theoretical and practical capacity concepts emphaslze supply factors, while normal capacity utilization and master-budget utllzation concepts emphasize demand factors The six-month rales for the master-budget uilization concept are different because of seasonal differences in budgeted production. Requirement 2. Compute the Buffalo Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization Begin by completing the following table to help you compute the operating income for each denominator-level capacity concept. (Round the rates to the nearest cent.) Per barrel Data Table Budgeted fixed Budgeted Budgeted variable mfg rate total mfg Denominator-level Fixed MOH capacity concept cost rate cost rate costs allocated per barrel Hours of Budgeted Fixed Days of 30.30 $ 35.78 $ $ 5.48 $ Theoretical capacity 14,412,400 Manufacturing Denominator-Level Production Production Barrels 7.63 37.93 20,066,900 Practical capacity 30.30 Overhead per Period Capacity Concept per Day per Period per Hour 10.18 30.30 40.48 26,773,400 Normal capacity utilization Theoretical capacity 356 28,100,000 24 600 Now compute the operating income for each capacity concept, one at a time. Label the variances as favorable (F) or unfa Practical capacity $ 354 28,100,000 20 520 Theoretical Normal capacity utilization 28,100,000 354 20 390 Master-budget capacity for each half acity year (a) January June 2017 14,050,000 177 20 340 Revenues |(b) July-December 2017 14,050,000 177 20 440 Cost of goods sold Beginning inventory Variable manufacturing costs Print Done Fixed manufacturing overhead cost allocated 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.) Theoretical Requirements acity Revenues Cost of goods sold 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 2017, the Buffalo Brewery reported these production results: Beginning inventory Variable manufacturing costs Beginning inventory in barrels, 1-1-2017 0 Fixed manufacturing overhead cost allocated Production in barrels 2,630,000 Cost of goods available for sale Ending inventory in barrels, 12-31-2017 230,000 Deduct ending inventory Actual variable manufacturing costs 79,689,000 Adjustment for variances $ 27,600,000 Actual fixed manufacturing overhead costs 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 Buffalo Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization Cost of goods sold Gross margin Other costs Operating income Done Print Choose from any list or enter any number in the input fields and then click Check Answer. Zing Lager has just purchased the Buffalo Brewery. The brewery is two years old and uses absorption costing. It will "sel its product to Zing Lager at $46 per barrel. Peter Bryant, Zing Lager's controller, obtains the following information about Buffalo Brewery's capadty and budgeted fixed manufacturing costs for 2017: E ( Click the icon to view the information.) Read the requirements Compute the budgeted fixed manufacturing averhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different Requirement Begin by determing the formula to calculate the budgeted fixed manufacturing overhead rate per barrel, then compute the rate for each of the denominator-level capacity concepts. (Abbreviations used: Budg. budgeted, MOH manufacturing overhead. Round the rates to the nearest cent.) Beund Budgeted fixed Budg. denominator level (barrels) Budg. fixed MOH per period MOH rate per barrel 5,126,400 $ 5.48 Theoretical capacity 28,100,000 3,681,600 S 28,100,000 Practical capacity 7.63 28,100,000 2,761,200 S 10.18 Normal capacily uilization Master-budget capacity for each half year 1,203,600 $ (a) January -June 2017 14,050,000 11.67 14.050,000 / 1,557,600S (b) July December 2017 S 9.02 Explain why they are different The theoretical and practical capacity concepts emphaslze supply factors, while normal capacity utilization and master-budget utllzation concepts emphasize demand factors The six-month rales for the master-budget uilization concept are different because of seasonal differences in budgeted production. Requirement 2. Compute the Buffalo Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization Begin by completing the following table to help you compute the operating income for each denominator-level capacity concept. (Round the rates to the nearest cent.) Per barrel Data Table Budgeted fixed Budgeted Budgeted variable mfg rate total mfg Denominator-level Fixed MOH capacity concept cost rate cost rate costs allocated per barrel Hours of Budgeted Fixed Days of 30.30 $ 35.78 $ $ 5.48 $ Theoretical capacity 14,412,400 Manufacturing Denominator-Level Production Production Barrels 7.63 37.93 20,066,900 Practical capacity 30.30 Overhead per Period Capacity Concept per Day per Period per Hour 10.18 30.30 40.48 26,773,400 Normal capacity utilization Theoretical capacity 356 28,100,000 24 600 Now compute the operating income for each capacity concept, one at a time. Label the variances as favorable (F) or unfa Practical capacity $ 354 28,100,000 20 520 Theoretical Normal capacity utilization 28,100,000 354 20 390 Master-budget capacity for each half acity year (a) January June 2017 14,050,000 177 20 340 Revenues |(b) July-December 2017 14,050,000 177 20 440 Cost of goods sold Beginning inventory Variable manufacturing costs Print Done Fixed manufacturing overhead cost allocated 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.) Theoretical Requirements acity Revenues Cost of goods sold 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 2017, the Buffalo Brewery reported these production results: Beginning inventory Variable manufacturing costs Beginning inventory in barrels, 1-1-2017 0 Fixed manufacturing overhead cost allocated Production in barrels 2,630,000 Cost of goods available for sale Ending inventory in barrels, 12-31-2017 230,000 Deduct ending inventory Actual variable manufacturing costs 79,689,000 Adjustment for variances $ 27,600,000 Actual fixed manufacturing overhead costs 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 Buffalo Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization Cost of goods sold Gross margin Other costs Operating income Done Print Choose from any list or enter any number in the input fields and then click CheckStep by Step Solution
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