Requirements 1 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 Denver Brewery reported these production results: Beginning inventory in barrels, 1-1-2017 Production in barrels Ending inventory in barrels, 12-31-2017 Actual variable manufacturing costs Actual fixed manufacturing overhead costs 27,300,000 2,620,000 200,000 $ 79,517,000 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 Denver Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization Data Table Budgeted Fixed Manufacturing Overhead per Period 28,100,000 28,100,000 28,100,000 Days of Hours Production Production Barrels per Period of Denominator-Level per Day 24 20 20 Capacity Concept 356 352 352 per Hour 535 490 390 Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity for each half year (a) January June 2017 (b) July-December 2017 14,050,000 176 20 310 14,050,000 176 20 470 Zing Lager has just purchased the Denver Brewery. The brewery is two years old and uses absorption costing. It will "sell" its product to Zing Lager at $43 per barrel Peter Bryant, Zing Lager's controller, obtains the following information about Denver Brewery's capacity and budgeted fixed manufacturing costs for 2017 Click the icon to view the information.) Read the requirements Requirement 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different. 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: Budgbudgeted, MOH manufacturing overhead. Round the rates to the nearest cent.) Budgeted fixed -MOH rate per barrel