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 $13,394 Indirect labor 33,195 Factory electricity 3,785 Indirect materials 7,862 Selling expenses 18,636 Administrative expenses 10,482 Total costs $87,354 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 5,400 0.15 Potato chips 2,400 0.10 Pretzels 0.12 1,800 9,600 Total If required, round all per-case answers to the nearest cent.

Answer 1

a)	Computation of plantwide factory overhead rate
	Factory depreciation		$ 13,394.00
	Indirect labor		$ 33,195.00
	Factory electricity		$   3,785.00
	Indirect materials		$   7,862.00
	Total factory OH		$ 58,236.00
	Total proc. Hours (workings)		1266
	Factory OH rate		$        46.00

Workings:

			Proc. Hours	Total
		Cases	per case	Proc. Hours
Tortilla chips		5400	0.15	810
Potato chips		2400	0.1	240
Pretzels		1800	0.12	216
				1266

b)	Allocation of OH to products
			Total		Per case
			Factory OH	Workings	Factory OH
	Tortilla chips		$ 37,260.00	(810 x $ 46)	$        6.90	($ 37260 / 5400)
	Potato chips		$ 11,040.00	(240 x $ 46)	$        4.60	($ 11040 / 2400)
	Pretzels		$   9,936.00	(216 x $ 46)	$        5.52	($ 9936 / 1800)
			$ 58,236.00