Question

Single Plantwide Factory Overhead Rate Salty Sensations Snacks Company 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 $18,779 Indirect labor 46,539 Factory electricity 5,307 Indirect materials 11,023 Selling expenses 26,127 Administrative expenses 14,697 Total costs $122,472 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 6,300 Potato chips 2,700 0.12 Pretzels 6,600 0.15 0.10 Total 15,600 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 factory overhead rate in (a) to determine the amount of total and per-case factory overhead allocated to each of the three products under generaly accepted accounting principles.

Answer 1

	Budgeted volume	Processing hours per case
Tortilla chips	6,300	0.10	630
Potato chips	2,700	0.12	324
Pretzels	6,600	0.15	990
Total	15,600		1,944

a.

Single plantwide factory overhead rate = $122,472 / 1,944 = $63 per processing hour.

b.

	Total factory overhead	Per case factory overhead
Tortilla chips	$39,690 (630*$63)	$6.3 (39,690/6,300)
Potato chips	20,412 (324*$63)	7.56 (20,412/2,700)
Pretzels	62,370 (990*$63)	9.45 (62,370/6,600)
Total	$122,472