Question

Uncle Bruce Snacks makes potato chips, corn chips, and cheese puffs using three different production lines within the same manufacturing plan.

Uncle Bruce Snacks makes potsto chips, com chips and c the potato chip ine, 3,150 in the corn chip ine, and 3,750 in the cheese puff line Uncle Bruce considers machine hours to be the cost diver of per machine hour 2. Calculate the overhead rates for Uncle Bruce's tvee production ines Round at answers to the Corn Chips Chouse Put Type here to

Answer 1

Answer:

1

What is Uncle Bruce’s plantwide overhead rate

Total estimated MOH	/	Total estimated cost driver	=		Per machine hour
3,845,400	/	17400	=	221

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2

Calculate departmental overhead rates for Uncle Bruce’s three production lines

Department	Overhead Cost		Machine Hours		Overhead Rate
Potato chips	1785000	÷	10,500 MH	=	170
Corn chips	1310400	÷	3,150 MH	=	416
Cheese puffs	750,000	÷	3,750 MH	=	200
Total	3845400	÷	17,400 MH		221

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3

Which products had been overcosted by the plantwide rate? Which products had been undercosted by the plantwide rate?

Plantwide Rate = $221 per machine hour

More Accurate Departmental Rate:

Potato Chips = $170/MH Overcosted

Corn Chips = 416MH Undercosted

Cheese Puffs = 200/MH Overcosted