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Tolman Lager has just purchased the Edmonton Brewery. The brewery is two years old and uses absorption costing. It will "sell" its product to Tolman Lager at $$43$ per barrel. Peter Bryant, Tolman Lager's controlle obtains the following information about Edmonton Brewery's capacity and budgeted fixed manufacturing costs for $2021.$

$($Click the icon to view the information.$)$

Theoretical capacity

Practical capacity

Normal capacity utilization

Normal capacity utilization

Master$-$budget capacity utilization for each half year:

$($a$)$ January$-$June $2021$

$($b$)$ July$-$December $2021$

Explain why they are different.

The $$ theoretical and practical capacity

$28,300,0001$

$28,300,000/$

$28,300,0007$

$28,300,000$

$3,366,0002,856,000=$

$2,856,000=$$

$14,150,000$;

$y1,008,000=$$

$

$1,768,000=$

$1,{7688}^{},000=$$

$

$

$1$

$14,150,000q,$

$\backslash$table$[[4,229,280=$$$,6\mathrm{.}69],[3,366,000=$$$,8\mathrm{.}41],[2,856,000=$$$,9\mathrm{.}91]]$

The six$-$month rates for the master$-$budget utilization concept are different because of seasonal differences in budgeted production.

Requirement $2.$ Compute the Edmonton Brewery's operating income when the denominator$-$level capacity is $($a$)$ theoretical capacity, $($b$)$ practical capacity, and $($c$)$ normal capacity utilization.

Begin by completing the following table to help you calculate the operating income for each denominator$-$level capacity concept. $($Round the rates to the nearest cent.$)$

$\backslash$table$[[\backslash$table$[[$Denominator$-$leyel capacity$],[$concept$]],4$ Per barrel,$],[\backslash$table$[[$Budgeted fixed$],[$MOH rate per$],[$barrel$]],\backslash$table$[[$Budgeted$],[$variable$],[$manufacturing$],[$cost rate$]],\backslash$table$[[$Budgeted total$],[$manufacturing$],[$cost rate$]],\backslash$table$[[$Fired MOH$],[$costs allocated$]]],[$heoretical capacity,,,,$]]$

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