Question

Single Plantwide Factory Overhead Rate Scrumptious Snacks Inc. 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 $29,435 Indirect labor Factory electricity 8,319 < Indirect materials 17,277 Selling expenses 40,954 Administrative expenses 23,035 Total costs $191,970 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 Processing Hours (Cases) Per Case Tortilla chips 5,400 0.12 Potato chips 5,700 0.15 Pretzels 0.10 Total 17,400 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 overhead rate in (a) to determine the amount of total and per-case overhead allocated to each of the three products under generally accepted accounting principles Total Per-Case Factory Overhead Factory Overhead Tortilla chips Potato chips Preces Total

Answer 1

a
Plantwide factory overhead rate	60	per processing hour
b
	Total factory overhead	Per case factory overhead
Tortilla chips	38880	7.20
Potato chips	51300	9.00
Pretzels	37800	6.00
Total	127980

Workings:
Factory depreciation	29435
Indirect labor	72949
Factory electricity	8319
Indirect materials	17277
Total factory overhead	127980
	Budgeted volume	Processing hours per case	Processing hours total
Tortilla chips	5400	0.12	648
Potato chips	5700	0.15	855
Pretzels	6300	0.10	630
Total	17400		2133
Plantwide factory overhead rate	60	=127980/2133
	Total factory overhead	Per case factory overhead
Tortilla chips	=648*60	=38880/5400
Potato chips	=855*60	=51300/5700
Pretzels	=630*60	=37800/6300