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Zing Lager has just purchased the Buffalo Brewery. The brewery is two years old and uses absorption costing. It will sell its product to
Zing Lager has just purchased the Buffalo Brewery. The brewery is two years old and uses absorption costing. It will "sell" its product to Zing Lager at $45 per barrel. Peter Bryant, Zing Lager's controller, obtains the following information about Buffalo 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 MOH rate per barrel
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