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3 years ago

Wallace's Wrench Company manufactures socket wrenches.

Business

1 answer:

Art [367]3 years ago

4 0

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

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