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 Indirect labor Factory electricity $18,779 46,539 5,307 11,023 26,127 Indirect materials Selling expenses 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 (Cases) Processing Hours Per Case 6,300 0.10 Tortilla chips Potato chips 2,700 0.12 Pretzels 6.600 0.15 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 percase factory overhead allocated to each of the three products under generally accepted accounting principles

Answer 1

Computation of Total Factory Overheads Factory depreciation $ 18,779.00 Indirect Labour $ 46,539.00 Factory Electricity $ 5,307.00 Indirect material $ 11,023.00 Total Cost $81,648.00 Computation of Total Hours Hour per case (B) 0.10 Cases (A) 6,300 2,700 6,600 15,600 Tortilla Chips Potato Chips Pretzels Total Total hours (AxB) 630.00 324.00 990.00 1,944 0.12 0.15 Total hours 1,944 hours a) Single Plantwide factory overhead rate = Total Cost / Total hours $81648 / 1944 $ 42.00 per processing hour b) Particulars Tortilla Chips Potato Chips Pretzels Total Total Hours 630.00 324.00 990.00 Total Factory overhead Hours x $42) $ 26,460.00 $ 13,608.00 $ 41,580.00 $ 81,648.00

Particulars Tortilla Chips Potato Chips Pretzels Per case Factory Per-case Overhead (per case hour hour x $42) 0.10 $ 4.20 0.12 $ 0.15 $ 6.30 5.04 Total Factory Overhead $ 26,460.00 $ $ 13,608.00 $ $ 41,580.00 $ $ 81,648.00 Per-case Factory overhead 4.20 Particulars Tortilla Chips Potato Chips Pretzels Total 5.04 6.30

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