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Super Lager has just purchased the Pittsburgh Brewery. The brewery is two years old and uses absorption costing. It will sell its product to SuperLager
Super Lager has just purchased the Pittsburgh Brewery. The brewery is two years old and uses absorption costing. It will "sell" its product to SuperLager at $44 per barrel. Peter Bryant, Super Lager's controller, obtains the following information about Pittsburgh Brewery's capacity and budgeted fixed manufacturing costs for 2014 :
Data Table Days of Production Production Barrels per Period Hours of Budgeted Fixed Manufacturing Overhead per Period Denominator-Level Capacity Concept per Day 24. 20 20 per Hour 535 500 390 $27,900,000 360 350 350 Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity for each half year (a) January-June 2014 (b) July-December 2014 27,900,000 $27,900,000 13,950,000 175 20 320 13,950,000 175 20 460 PrintDoneStep by Step Solution
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