Question

Single Plantwide Factory Overhead Rate Scrumptious Snacks Inc. 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 $17,167 Indirect labor 42,545 Factory electricity 4,852 Indirect materials 10,076 Selling expenses 23,885 Administrative expenses 13,435 Total costs $111,960 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 Tortilla chips 2,700 0.10 Potato chips 1,500 0.15 Pretzels 3,900 0.12 Total 8,100 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 overhead rate in (a) to determine the amount of total and per-case overhead allocated to each of the three products under generally accepted accounting principles. Total Factory Overhead Per-Case Factory Overhead Tortilla chips Potato chips Pretzels Total $

Answer 1

Answer:

Scrumptious Snacks Inc.

a. Single plantwide factory overhead rate = $77.51 per hour

b.                      Total Factory   Per-Case Factory

                            Overhead         Overhead

Tortilla chips         $20,928              $7.75

Potato chips             17,440                11.63

Pretzels                   36,275                9.30

Total                      $74,643

Explanation:

a) Data and Calculations:

Budgeted costs:

Factory depreciation           $17,167

Indirect labor                       42,545

Factory electricity                 4,852

Indirect materials               10,076

Total factory overhead = $74,640

Selling expenses               23,885

Administrative expenses   13,435

Total costs                       $111,960

Production budget and processing hours per case:

                          Budgeted Volume    Processing        Total

                                   (Cases)          Hours Per Case   Hours

Tortilla chips                 2,700                  0.10               270

Potato chips                  1,500                  0.15               225

Pretzels                        3,900                  0.12               468

Total                              8,100                                        963

a. Single plantwide factory overhead rate = $77.51 ($74,640/963)

b. Overhead allocated to each product:

                                       Total                   Total        Budgeted    Per Case

                                     Hours                Overhead       Cases     Overhead

Tortilla chips                  270 * $77.51 = $20,928        2,700       $7.75

Potato chips                  225 * $77.51 =     17,440         1,500       $11.63

Pretzels                         468 * $77.51 =    36,275        3,900       $9.30

Total                              963               =  $74,643         8,100