Wallace's Wrench Company manufactures socket wrenches.
1. For next month, the vice president of production plans on producing 4,000 wrenches per day.
2. The company can produce as many as 6,000 wrenches per day, but is more likely to produce 5,500 per day.
3. The demand for wrenches for the next three years is expected to average 4,150 wrenches per day.
4. Fixed manufacturing costs per month total $360,000.
5. The company works 20 days a month.
6. Fixed manufacturing overhead is charged on a per-wrench basis.
Required:
a. What is the theoretical fixed manufacturing overhead rate per wrench for the next month?
b. What is the practical fixed manufacturing overhead rate per wrench for the next month?
c. What is the normal fixed manufacturing overhead rate per wrench for the next month?
d. What is the master-budget fixed manufacturing overhead rate per wrench for the next month?
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