Predetermined Overhead Rates; Activity Levels. Parts Manufacturers (PM) is a maker of small steel machine parts. PM’s total factory overhead costs are a linear function of the number of tons of steel processed. PM’s theoretical capacity is 15,000 tons per year, practical capacity is 8,000 tons per year, normal capacity is 6,000 tons per year; 5,000 tons was the budgeted amount to be processed in the year just ended. LO6 At the beginning of each year, PM budgets the expected actual factory overhead costs for the coming year and divides by the budgeted (expected actual) activity for the coming year. The result is the predeter¬ mined overhead rate.

Actual activity in the year just ended was 5,500 tons, and budgeted factory overhead costs were $5,350,000. The factory overhead budget would be $6,070,000 at normal capacity. Actual factory overhead costs in the year just ended were $5,340,500.

Required:

(1) Use the high and low points method (Chapter 3) to calculate the budgeted fixed overhead and the bud¬ geted variable overhead rate per ton for the year just ended, assuming the practical capacity level of activity is within the relevant range.

(2) If PM had used practical capacity as the activity level in its predetemiined overhead rate calculation for the year just ended, what would have been the predetermined factory overhead rate per ton? (Calculate to two decimal places.)