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Lightning. Inc, is a manufacturer of the very popular G36 motorcycles. The management at Lightning has recontly adoptod absorption costing and is debating which denominator-level concept to use. The G36 motorcycles sell for an average price of $8,300 Budgeted fixed manulacturing overhead costs tot 2017 are estimated at $4,050,000 Lightning, Inc, uses subassembly operators that provide component parts. The following are the denominator-level options that management has been considering (Click the icon to vew the options) Read the requirements Requirement 1. Cakculate the budgeted fixed manufacturing overhead cost rates under each concept (Round your answers te avo secmar pacess Requirements 1. Calculate the budgeted fixed manufacturing overhead cost rates under the four denominator-level concepts 2. What are the benefits to Lightning, Inc, of using either theoretical capacity or practical capacity? 3. Under a cost-based pricing system, what are the negative aspects of a master-budget denominator level? What are the positive aspects? a. Theoretical capacity-based on three shifts, completion of six motorcycles per shift, and a 360 -day year 36360=6,480. b. Practical capacity - theoretical capacity adjusted for unavoidable interruptions, breakdowns, and so forth 35320=4,800 c. Normal capacity utilization-estimated at 4,000 units. d. Master-budget capacity utilization-the strengthening stock market and the growing popularity of motorcycles have prompted the marketing department to issue an estimate for 2017 of 4,500 units

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