Budgeted Fixed Manufacturing Overhead Rate: The budgeted fixed manufacturing overhead rate is that rate at which the total budgeted fixed overhead costs are allocated. Production Volume Variance: The production volume variance is the difference between the budgeted amounts of fixed overhead costs less the fixed overhead cost allocated for the actual output produced. The effect on operating income using each type of capacity as a basis for calculating manufacturing cost per unit.

Step 1. To determine the Budgeted Fixed Manufacturing Overhead Rate and Production Volume Variance, we need to know the definition of each term. The Budgeted Fixed Manufacturing Overhead Rate is the rate at which the total budgeted fixed overhead costs are allocated. The Production Volume Variance is the difference between the budgeted amounts of fixed overhead costs less the fixed overhead cost allocated for the actual output produced. Step 2. To calculate the effect on operating income using each type of capacity as a basis for calculating manufacturing cost per unit, we need to perform the following steps: 1. Gather the given information: - The number of units produced is 300,000. - The variable cost of production is $2.40perbulb.-Thesellingpriceofthebulbis$9.80 per bulb. - The fixed and manufacturing costs are $1,170,000.-Thevariablesellingandadministrativeexpensesare$0.20. - The fixed selling and administrative expenses are $220,\mathrm{000.2.}Calculatetheoperatingincomeforeachtypeofcapacity:-Theoreticalcapacity:-Revenues:300,000x9.80=$2,940,000 - Cost of goods sold: variable manufacturing overhead cost + allocated fixed manufacturing cost = $720,000+$390,000 = 1,110,000 - Operating income: Revenues - Cost of goods sold = $2,940,000-$1,110,000 = $1,830,000-Practicalcapacity:-Revenues:300,000x9.80=$2,940,000 - Cost of goods sold: variable manufacturing overhead cost + allocated fixed manufacturing cost = $720,000+$675,000 = 1,395,000 - Operating income: Revenues - Cost of goods sold = $2,940,000-$1,395,000 = $1,545,000-Normalcapacity:-Revenues:300,000x9.80=$2,940,000 - Cost of goods sold: variable manufacturing overhead cost + allocated fixed manufacturing cost = $720,000+$1,350,000 = 2,070,000 - Operating income: Revenues - Cost of goods sold = $2,940,000-$2,070,000 = $870,000-Masterbudget:-Revenues:300,000x9.80=$2,940,000 - Cost of goods sold: variable manufacturing overhead cost + allocated fixed manufacturing cost = $720,000+$1,560,000 = 2,280,000 - Operating income: Revenues - Cost of goods sold = $2,940,000-$2,280,000 = $660,000 3. Record the results in a table (Table 1). Step 3. To determine the comparison of results of operating income at different capacity levels when 225,000 bulbs were sold and when 300,000 bulbs were sold, we need to perform the following steps: 1. Gather the given information: - The number of units sold: 225,000 bulbs and 300,000 bulbs. 2. Calculate the operating income for each capacity level: - For 225,000 bulbs sold: - Determine the corresponding revenues, cost of goods sold, and operating income using the values from Table 1. - For 300,000 bulbs sold: - Determine the corresponding revenues, cost of goods sold, and operating income using the values from Table 1. 3. Compare the results of operating income for each capacity level and draw a conclusion based on the comparison. Step 4. To determine the operating income under each level of capacity if the company had used the proration approach to allocate the production-volume variance, we need to perform the following steps: 1. Gather the given information: - The capacity levels: Theoretical capacity, Practical capacity, Normal capacity, and Master budget. - The production-volume variance calculated in Step 2. 2. Calculate the operating income for each capacity level: - Allocate the production-volume variance proportionally among the capacity levels using the proration approach. - Adjust the cost of goods sold by adding the allocated production-volume variance. - Calculate the operating income by subtracting the adjusted cost of goods sold from the revenues. 3. Record the results in a table. The step-by-step explanation includes understanding the definitions of Budgeted Fixed Manufacturing Overhead Rate and Production Volume Variance, performing calculations to determine operating income using each type of capacity, comparing operating income at different capacity levels, and determining the operating income under each level of capacity using the proration approach.