Question

1. 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		$17,457
   Indirect labor		43,263
   Factory electricity		4,934
   Indirect materials		10,246
   Selling expenses		24,288
   Administrative expenses		13,662
   	Total costs	$113,850

   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			5,400			0.12
   Potato chips			1,800			0.15
   Pretzels			6,000			0.10
   	Total		13,200

   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

	Budgeted Volume (Cases)	Processing Hours per case	Total processing Hours required
Tortilla Chips	5400	0.12	648
Potato Chips	1800	0.15	270
Pretzels	6000	0.10	600
Total Processing Hours			1518
Factory Depreciation	17,457
Indirect Labor	43,263
Factory Electricity	4,934
Indirect Materials	10,246
Total Factory overhead	75,900
Requirement a
Single plantwide factory overhead rate = Total factory overhead/Total Processing hours
	= $75,900/1,518 hours
	= $50 per processing hour

Requirement b
	Total processing Hours	Overhead rate per processing hour	Total factory overhead	Budgeted Volume (Cases)	Per case factory overhead
Tortilla Chips	648	50	$32,400	5400	$6.00
Potato Chips	270	50	13,500	1800	7.50
Pretzels	600	50	30,000	6000	5.00