Use the Information Below to Answer the Following Question(s)

Use the information below to answer the following question(s) .
Balloon Arrangements produces balloon bouquets. The following information has been provided by management:

-Which denominator level is required by Canada Revenue Agency for income tax reporting?

A) master-budget capacity without full proration of variances between inventories and cost of goods sold
B) practical capacity without full proration of variances between inventories and cost of goods sold
C) normal capacity with full proration of variances between inventories and cost of goods sold
D) practical capacity with full proration of variances between inventories and cost of goods sold
E) master-budget capacity with full proration of variances between inventories and cost of goods sold