%x P9-37 (similar to) Question Help Fortune Lager has just purchased the Boise Brewery. The brewery is two years old and uses absorption costing. It will "sell" its product to Fortune Lager at $45 per barrel. Peter Bryant, Fortune Lager's controller, obtains the following information about Boise 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: Budg. = budgeted, MOH = manufacturing overhead. Round the rates to the nearest cent.) Budgeted fixed Budg. fixed MOH per period | Budg. denominator level (barrels) = MOH rate per barrel Theoretical capacity = 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 Boise Brewery reported these production results: Beginning inventory in barrels, 1-1-2017 0 Production in barrels 2,630,000 Ending inventory in barrels, 12-31-2017 200,000 Actual variable manufacturing costs $ 79,031,500 Actual fixed manufacturing overhead costs $ 27,100,000 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 Boise Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. X - Data Table Budgeted Fixed Manufacturing Overhead per Period Days of Hours of Production Production Barrels per per Period per Day Hour 27,800,000 356 24 540 Denominator-Level Capacity Concept Theoretical capacity Practical capacity Normal capacity utilization Master-budget capacity utilization for each alf year: 27,800,000 350 20 505 27,800,000 350 20 400 13,900,000 175 20 330 (a) JanuaryJune 2017 (b) JulyDecember 2017 13,900,000 175 20 470