Exercise 2B-1 Overhead Rate Based on Capacity [LO2-6] Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a job-order costing system. The capacity of the plant is determined by the capacity of its constraint, which is time on the automated bandsaw that makes finely beveled cuts in wood according to the preprogrammed specifications of each cabinet. The bandsaw can operate up to 187 hours per month. The estimated total manufacturing overhead cost at capacity is $15.708 per month. The company bases its predetermined overhead rate on capacity, so its predetermined overhead rate is $84 per hour of bandsaw use. The results of a recent month's operations appear below: Sales $43,800 Ending inventories Direct materials Direct labor Manufacturing overhead incurred s 5, 390 s 8,890 s 8,160 157 Actual hours of bandsaw use Required: 1-a. Prepare an income statement that records the cost of unused capacity on the income statement as a perio enns Required: 1-a. Prepare an income statement that records the cost of unused capacity on the income statement as a perio 1-b. How much of the cost of unused capacity can be shown on the income statement as a period expense? ow. Requlred 1-a. Prepare an inc 1-b. How much of the cost of unused capacity can be ome statement that records the cost of unused capacity on the income statement as shown on the income statement as a period expense