Answer:
a. $3
b. $3.27
c. $4.34
d. $4.5
Explanation:
a. The computation of theoretical fixed manufacturing overhead rate is shown below:-
Theoretical fixed manufacturing overhead rate = Total Fixed manufacturing costs per month ÷ (Wrenches per day × Work days)
= $360,000 ÷ (6,000 × 20)
= $360,000 ÷ 120,000
= $3
b. The computation of the practical fixed manufacturing overhead rate is shown below:-
Practical fixed manufacturing overhead rate = Total Fixed manufacturing costs per month ÷ (Production per day × Work days)
= $360,000 ÷ (5,500 × 20)
= $360,000 ÷ 110,000
= $3.27
c. The computation of the normal fixed manufacturing overhead rate is shown below:-
Normal fixed manufacturing overhead rate = Total Fixed manufacturing costs per month ÷ (Average wrench per day × Work days)
= $360,000 ÷ (4,150 × 20)
= $360,000 ÷ 83,000
= $4.34
d. The computation of the master-budget fixed manufacturing overhead rate is shown below:-
Master-budget fixed manufacturing overhead rate = Total Fixed manufacturing costs per month ÷ (Production wrench per day × Work days)
= $360,000 ÷ (4,000 × 20)
= $360,000 ÷ 80,000
= $4.5
