In: Accounting
#2
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 | $11,233 | ||
Indirect labor | 27,839 | ||
Factory electricity | 3,175 | ||
Indirect materials | 6,593 | ||
Selling expenses | 15,629 | ||
Administrative expenses | 8,791 | ||
Total costs | $73,260 |
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 | 5,700 | 0.15 | ||||||
Potato chips | 1,800 | 0.12 | ||||||
Pretzels | 1,500 | 0.10 | ||||||
Total | 9,000 |
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 | $ |