Single plantwide factory overhead rate Krispy Treats Snack Food Company manufact

Question

Single plantwide factory overhead rate

Krispy Treats Snack Food 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 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:

If required, round all per-case answers to nearest cent.

a.  Determine the single plantwide factory overhead rate.
$

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 generally accepted accounting principles.

Factory depreciation $16,637 Indirect labor 41,232 Factory electricity 4,702 Indirect materials 9,765 Selling expenses 23,148 Administrative expenses 13,020 Total costs $108,504

Explanation / Answer

Hi,

Please find the answer as follows:

Total Overheads = (16637 + 41232 + 4702 + 9765) = 72336

Part A:

Plantwide Overhead Rate = Total Overheads/Total Estimated Hours = 72336/1644 = 44 per hour

Part B:

Thanks.

Estimated Production Processing Hours Per Case Total Hours Tortilla chips 2400 0.1 240 Potato chips 6000 0.15 900 Pretzels chips 4200 0.12 504 Total 12600
1644

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