Question

Single Plantwide Factory Overhead Rate Salty Sensations Snacks Company manufactures three types of snack foods: tortilla chips, potato chips, and pretzels. The company has budgeted the following costs for the upcoming period: Factory depreciation Indirect labor $23,995 59,467 6,781 Factory electricity Indirect materials 14,085 Selling expenses 33,385 Administrative expenses 18,779 Total costs $156,492 Factory overhead is allocated to the three products on the basis of processing hours. The products had the following production budget and processing hours per case: Budgeted Volume (Cases) Processing Hours Per Case 6,000 Tortilla chips Potato chips 4,800 0.10 0.15 0.12 Pretzels 5,100 Total 15,900 If required, round all per-case answers to the nearest cent. a. Determine the single plantwide factory overhead rate. per processing hour b. Use the factory overhead rate in (a) to determine the amount of total and per-case factory overhead allocated to each of the three products under generally accepted accounting principles.

Answer 1

Factory Depreciation	23995
Indirect labor	59467
Factory electricity	6781
Indirect materials	14085
Total factory overhead	104328
	Cases	Hours per case	Total hours
Tortilla chips	6000	0.10	600
Potato chips	4800	0.15	720
Pretzels	5100	0.12	612
Total	15900		1932
a
Total factory overhead	104328
Divide by Total hours	1932
Single plantwide factory overhead rate	54	per processing hour
b
	Total Factory overhead	Per case Factory overhead
Tortilla chips	32400	5.40
Potato chips	38880	8.10
Pretzels	33048	6.48
Total	104328
Workings for b:
	Total Factory overhead	Per case Factory overhead
Tortilla chips	=600*54	=32400/6000
Potato chips	=720*54	=38880/4800
Pretzels	=612*54	=33048/5100