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		$15,496
Indirect labor		38,403
Factory electricity		4,379
Indirect materials		9,096
Selling expenses		21,560
Administrative expenses		12,127
	Total costs	$101,061

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			4,500			0.15
Pretzels			6,900			0.12
	Total		14,100

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 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	Per-Case Factory Overhead
Tortilla chips	$	$
Potato chips
Pretzels
Total	$

Answer 1

Factory depreciation	15496
Indirect labor	38403
Factory electricity	4379
Indirect materials	9096
Total factory Overhead	67374
	Budgeted Volume	Processing Hours Per Case	Total Processing Hours
Tortilla chips	2700	0.10	270
Potato chips	4500	0.15	675
Pretzels	6900	0.12	828
Total			1773
a
Total factory Overhead	67374
Divide by Total Processing Hours	1773
Single plantwide factory overhead rate	38	per processing hour
b
	Total Factory Overhead	Per-Case Factory Overhead
Tortilla chips	10260	3.80
Potato chips	25650	5.70
Pretzels	31464	4.56
Total	67374
Workings:
	Total Factory Overhead	Per-Case Factory Overhead
Tortilla chips	=270*38	=10260/2700
Potato chips	=675*38	=25650/4500
Pretzels	=828*38	=31464/6900