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BFS
Knuckles is trying tо determine а denоminаtоr level for the compаny’s budgeted production that will accurately portray the fixed-MOH cost per unit. The level should provide a solid gross margin and operating income. The company wants to set an achievable denominator so employees are not discouraged, but that will also motivate the employees to work harder to reach the goal. Knuckles has come up with three fixed-MOH capacity options with fixed-MOH expected to be $260,000 next year. Theoretical level 125,000 units Practical level 112,000 units Normal level 100,000 units Required: [6 points] Calculate the budgeted fixed MOH rate of each level. (Round to the nearest cent.) [1 point] Which level will generate the highest estimated gross margin per unit? [2 points] Which level represents the most accurate measurement of the fixed-MOH cost per unit? Why?