Chaviano Construction Is Planning on Purchasing New Machinery for the Upcoming

Essay

Chaviano Construction is planning on purchasing new machinery for the upcoming year. The company believes, if everything is perfect, the machinery can generate 110 units per hour, 24 hours per day, 365 days per year. However, the manager is more realistic and understands the company will shut down for 10 days a year for holidays and will have downtime of approximately 2 hours per day, each day. A more reasonable output of units is 96 per day. The budgeted fixed MOH costs are expected to be $960,000. Calculate Chaviano's theoretical and practical capacity for the next year. What will the fixed MOH rate be for the theoretical and practical capacity? (Round final answer to nearest cent for fixed MOH rate.)