Absorption costing and production-volume variance—alternative capacity bases. planet light first (plf), a producer ofenergy-efficient light bulbs, expects that demand will increase markedly over the next decade. due to the high fixed costsinvolved in the business, plf has decided to evaluate its financial performance using absorption costing income. theproduction-volume variance is written off to cost of goods sold. the variable cost of production is $240 per bulb. fixedmanufacturing costs are $1,170,000 per year. variable and fixed selling and administrative expenses are $0.20 per bulbsold and $220,000, respectively. because its light bulbs are currently popular with environmentally conscious customers, plf can sell the bulbs for $9.80 each. plf is deciding among various concepts of capacity for calculating the cost of eachunit produced. its choices are as follows: theoretical capacity mm hubspractical capaciy 5mm hill): normal capaciy zoom hulls (average expected output for the next three years}master budget capacity hubs expected production this year1. calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit. 2suppose plf actually produces 300,000 bulbs. calculate the production-volume variance using each level of capacity tocompute the fixed manufacturing overhead allocation rate. 3. assume plf has no beginning inventory. if this year’s actualsales are 225,000 bulbs, calculate operating income for plf using each type of capacity to compute fixed manufacturingcost per unit.