Wallace's Wrench Company Manufactures Socket Wrenches

question 145

Essay

Wallace's Wrench Company manufactures socket wrenches.
∙ For next month,the vice CEO of production plans on producing 4400 wrenches per day.
∙ The company can produce as many as 5000 wrenches per day,but is more likely to produce 4500 per day.
∙ The demand for wrenches for the next three years is expected to average 4250 wrenches per day.
∙ Fixed manufacturing costs per month total $336 600.
∙ The company works 20 days a month.
∙ Fixed manufacturing overhead is charged on a per-wrench basis.
Required:
a.What is the theoretical fixed manufacturing overhead rate per wrench?
b.What is the practical fixed manufacturing overhead rate per wrench?
c.What is the normal fixed manufacturing overhead rate per wrench?
d.What is the budgeted fixed manufacturing overhead rate per wrench?
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Definitions:

Adjusting Journal Entry

A record in accounting that is used to adjust incomes and expenses to match the accounting period in which they actually occurred.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal.

Allowance For Doubtful Accounts

An account opposite to assets that predicts the amount of accounts receivable that might not be recoverable.

Allowance for Doubtful Accounts

An accounting provision made to account for customers' invoices that may not be collectible in the future.