Zing Lager has just purchased the Chicago Brewery. The brewery is 2 years old and uses absorption costing. It will "sell" its product to Zing Lager at $44 per barrel. Peter Bryant, Zing Lager's controller, obtains the following information about Chicago Brewery's capacity and budgeted fixed manufacturing costs for 2020: (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.) = MC Budgeted fixed. Data table Requirements B E Budgeted Fixed 1. Compute the budgeted fixed manufacturing overhead rate per barrel for each of the denominator-level capacity concepts. Explain why they are different. 1 Denominator-Level Capacity Concept Manufacturing Overhead per Period Days of Hours of Production Production Barrels per per Period per Day Hour 2. In 2020, the Chicago Brewery reported these production results: 2 Theoretical capacity $ 28,300,000 360 24 530 B 3 Practical capacity $ 28,300,000 352 20 500 12 Beginning inventory in barrels, 1-1-2020 13 Production in barrels 14 Ending inventory in barrels, 12-31-2020 15 Actual variable manufacturing costs 16 Actual fixed manufacturing overhead costs 2,640,000 180,000 $ 79,464,000 $ 26,900,000 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 Chicago Brewery's operating income when the denominator-level capacity is (a) theoretical capacity, (b) practical capacity, and (c) normal capacity utilization. 0 4 Normal capacity utilization $ 28,300,000 352 20 395 Master-budget capacity utilization for 5 each half year: 6 (a) January-June 2020 $ 7 (b) July-December 2020 $ 14,150,000 14,150,000 176 20 310 176 20 480 Print Done