Soul Socket Inc. Manufactures Socket Wrenches

question 158

Essay

Soul Socket Inc. manufactures socket wrenches.
-For next month, the vice president of production plans on producing 4,450 wrenches per day.
-The company can produce as many as 5,000 wrenches per day, but is more likely to produce 4,500 per day.
-The demand for wrenches for the next three years is expected to average 4,250 wrenches per day.
-Fixed manufacturing costs per month total $374,000.
-The company works 22 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 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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Definitions:

Investor Model

A framework or plan that outlines how investors can fund businesses or projects expecting profitability.

Crowdfunders

Individuals who financially support projects, causes, or businesses through crowdfunding platforms, often in exchange for rewards, equity, or nothing at all.

Equity

Ownership interest in a company or property, representing a share of the value after debts are subtracted.

Manufacture Prototypes

The process of creating early models or samples of a product to test its functionality, design, and feasibility.