Question

Aunt Dorothy Snacks just received an order to produce 13,000 single-serving bags of gourmet, fancy-cut, sweet potato chips. The order will require 16 preparation hours and 31 cooking and draining hours. (Click the icon to view the relevant activity rates.) Read the requirements. 1. What is the total amount of manufacturing overhead that should be allocated to this order? Determine the basic formula needed to allocate overhead to this order, then compute the overhead allocated to each activity. Manufacturing overhead allocated Requirements Data Table Activity Activity Cost Allocation Rate Cost Driver Use the activity rates provided to compute the following: 1. What is the total amount of manufacturing overhead that should be allocated to this order? 2. How much manufacturing overhead should be assigned to each bag? 3. What other costs will the company need to consider to determine the total manufacturing costs of this order? 61.00 Preparation. .... Cooking and draining Packaging... $ 44.00 Preparation time Cooking and draining time Units packaged 0.10 Print Done Print Done

Answer 1

1) Formula

Expected activity	*	Activity rate	=	Manufacturing overhead allocated

Calculate total amount of manufacturing overhead

Preparation (61*16)	976
Cooking and draining (44*31)	1364
Packaging (13000*.10)	1300
Total manufacturing overhead	3640

2) Manufacturing overhead of each bag = 3640/13000 = 0.28

3) Direct material and direct labor would also consider to determine the total manufacturing cost