Tasty Lager has just purchased the Philadelphia Brewery. The brewery is two years old and uses absorption costing. It will "sell its product to Tasty Lager at $44 per barrel. Peter Bryant, Tasty Lager's controller, obtains the following information about Philadelphia Brewery's capacity and budgeted fixed manufacturing costs for 2017: (Click the icon to view the information.) Read the requirements. i 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 2017, the Philadelphia Brewery reported these production results: Beginning inventory in barrels, 1-1-2017 Production in barrels 2,620,000 Ending inventory in barrels, 12-31-2017 220,000 Actual variable manufacturing costs $ 79,648,000 Actual fixed manufacturing overhead costs $ 26,600,000 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 Philadelphia Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. Print [ Done Print Done 1 Data Table Denominator-Level Budgeted Fixed Manufacturing Overhead per Period 27,700,000 27,700,000 27,700,000 Days of Hours of Production Production per Period per Day 360 24 Barrels per Hour 550 A 354 490 Capacity Concept Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity for each half year (a) JanuaryJune 2017 (b) JulyDecember 2017 A 354 405 A f 325 13,850,000 13,850,000 - 177 - 177 20 20 $ 485 Print Done