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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
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 Philadelphia 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 Philadelphia Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Lucky Lager has just purchased the Philadelphia Brewery. The brewery is 2 years old and uses absorption costing. It will "sell" its product to Lucky Lager at $46 per barrel. Peter Bryant, Lucky Lager's controller, obtains the following information about Philadelphia Brewery's capacity and budgeted fixed manufacturing costs for 2020: (Click the icon to view the information.) Read the 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: Budg. = budgeted, MOH= manufacturing overhead. Round the rates to the nearest cent.) Data table
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