Single plantwide factory overhead rate Instructions Salty Sensations Snacks Comp
ID: 2451833 • Letter: S
Question
Single plantwide factory overhead rate
Instructions
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:
Question not attempted.
1
Factory depreciation
$31,360.00
2
Indirect labor
78,400.00
3
Factory electricity
7,840.00
4
Indirect materials
35,400.00
5
Selling expenses
25,000.00
6
Administrative expenses
18,000.00
7
Total costs
$196,000.00
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:
Required:
Budgeted Volume (Cases)
Processing Hours per Case
Tortilla chips
4,000
0.20
Potato chips
5,000
0.15
Pretzels
2,500
0.40
Total
11,500
A. Determine the single plantwide factory overhead rate. If required, round your answer to the nearest cent.
per processing hour
Points:
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Explanation
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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. If required, round your answer to the nearest cent.
Total Factory Overhead
Case Factory Overhead
Explanation / Answer
A.Single Plant wide factory overhead rate per processing hour will be = Total Factory Overheads/No. Of processing hours
Factory Overheads = Overheads incurred in manufacturing of product
= Factory Depreciation + Indirect labor+Factory Electricity + Indirect Materials
=153000
Note: Seeling and Administrative expenses are not a part of Factory Overheads
Total Processing Hours = 4000*0.2+5000*0.15+2500*0.4
= 2550
Therefore, Single Plant wide factory overhead rate per processing hour = 153000/2550
=60 per processing hour
B.
Product
Total Factory Overhead
Case Factory Overhead
Tortilla Chips
4000*0.2*60 = 48000
48000/4000 = 12
Potato Chips
5000*0.15*60 = 45000
45000/5000 = 9
Pretzels
2500*0.4*60 = 60000
60000/2500 = 24
Total
153000
Product
Total Factory Overhead
Case Factory Overhead
Tortilla Chips
4000*0.2*60 = 48000
48000/4000 = 12
Potato Chips
5000*0.15*60 = 45000
45000/5000 = 9
Pretzels
2500*0.4*60 = 60000
60000/2500 = 24
Total
153000