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Predetermined Overhead Rates; Activity Levels. Stevens Fabricators ( SF ) is a maker of small steel machine parts. The company's total factory overhead costs are
Predetermined Overhead Rates; Activity Levels. Stevens Fabricators SF is a maker of small steel machine parts. The company's total factory overhead costs are a linear function of the number of tons of steel processed. The company's theoretical capacity is tons per year, practical capacity is tons per year, normal capacity is tons per year; tons was the budgeted amount to be processed in the year just ended.At the beginning of each year, the company 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 predetermined overhead rate.Actual activity in the year just ended was tons, and budgeted factory overhead costs were $ The factory overhead budget would be $ at normal capacity. Actual factory overhead costs in the year just ended were $Required: Use the high and low points method Chapter to calculate the budgeted fixed factory overhead and the budgeted variable factory overhead rate per ton for the yeai just ended, assuming the practical capacity level of activity is within the relevant range. If the company had used practical capacity as the activity level in its predetermined overhead rate calculation for the year just ended, what would have been the predetermined overhead rate per ton? Calculate to two decimal places.
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