Single Plantwide Factory Overhead Rate Salty Sensations Snacks Company manufactu
ID: 2536263 • Letter: S
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 Indirect materials Selling expenses Administrative expenses $22,640 56,109 6,398 13,289 31,500 17,718 Total costs $147,65 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) 1,200 6,300 6,900 14,400 Processing Hours Per Case 0.10 0.15 0.12 Tortilla chips Potato chips Pretzels Total 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 generally accepted accounting principles Total Per-Case Factory Overhead Factory Overhead Tortilla chips Potato chips Pretzels TotalExplanation / Answer
A. The single plantwide factory overhead rate = $52 per Hour
Single plantwide factory overhead rate = (Total factory overhead / Total processing hours)
Total factory overhead = $1,47,654 - $31500 - $17718 = $ 98436
Total processing hours = (1200 x 0.10) + (6300 x 0.15) + (6900 x 0.12)
= 120 + 945 + 828
= 1893 Hours
Single plantwide factory overhead rate = $ 98436 / 1893 = $52 per 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 generally accepted accounting principles.
Total Factory Overhead
Tortilla Chips = 120 x $52 = $6,240
Potato Chips = 945 x $52 = $49,140
Pretzels = 828 x $52 = $43,056
Per Case Factory Overhead
Tortilla Chips = $6,240 / 1200 = $ 5.2
Potato Chips = $49,140 / 6300 = $7.8
Pretzels = $43,056 / 6900 = $6.24