BND Sportswear is able to produce 1,000 pairs of shoes per hour, at maximum efficiency. There are three eight-hour shifts each day (ie. 24 hours per day). Due to unavoidable operating interruptions, production averages 800 units per hour.

In the month of September, the manufacturing plant actually operated only 25 days due to avoidable shut downs, and produced 500,000 pairs of shoes.

Required: (show all calculations)

a) What is the theoretical capacity for the month of September? Hint: There are 30 days in the month of September

b) What is the practical capacity for the month of September?

c) Will there be an OVER or UNDER allocation of fixed manufacturing overhead, if practical capacity is used as the denominator level of activity in the month of September? Why?

d) What information does the OVER or UNDER allocation from part c) provide to the management of BND Sportswear?