Question

1. 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		$14,076
   Indirect labor		34,884
   Factory electricity		3,978
   Indirect materials		8,262
   Selling expenses		19,584
   Administrative expenses		11,016
   	Total costs	$91,800

   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
   Tortilla chips			2,100			0.10
   Potato chips			1,800			0.15
   Pretzels			4,500			0.12
   	Total		8,400

   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 Factory Overhead	Per-Case Factory Overhead
   Tortilla chips	$	$
   Potato chips
   Pretzels
   Total	$

Answer 1

a. Single plantwide factory Overhead rate Factory overhead is allocated on the basis of processing hours Factory overhead = Total Factory Overhead/processing hours Total Factory Overhead ($) Factory Depreciation 14076 Indirect labour 34884 Factory Electricity 3978 Indirect Material 8262 Total Factory Overhead 61200 *Selling expenses and Adminstrative expenses are not considered as factory expenses Therefore not included in factory overhead

Product Tortilla Chips Potato Chips Pretzels Total Processing hours Quantity Processing Hours Total processing hours 2100 0.1 210 1800 0.15 270 4500 0.12 540 1020 Factory Overhead Rate = 61200/1020 $60 Single plantwide factorey overhead rate is $60 per processing hr

b. Products Tortilla Chips Potato Chips Pretzels Total Total Factory Overhead Per case factory overhead Quantity*Per case Overhead rate Overhead rate*processing hrs 12600 6 16200 9 32400 7.2 61200 22.2