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 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.
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 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 to calculate the budgeted fixed factory overhead and the budgeted variable factory overhead rate per ton for the year just ended, assuming the practical capacity level of activity is within the relevant range.
(2) 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.)