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Single Plantwide Factory Overhead Rate Salty Sensations Snacks Company manufactures three types of snack foods: tortilla chips,...

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Accounting

Single Plantwide Factory Overhead Rate

Salty Sensations Snacks Company manufactures three types ofsnack foods: tortilla chips, potato chips, and pretzels. Thecompany has budgeted the following costs for the upcomingperiod:

Factory depreciation$24,331
Indirect labor60,298
Factory electricity6,876
Indirect materials14,281
Selling expenses33,852
Administrative expenses19,041
Total costs$158,679

Factory overhead is allocated to the three products on the basisof processing hours. The products had the following productionbudget and processing hours per case:

Budgeted Volume
(Cases)		Processing Hours
Per Case
Tortilla chips6,0000.10
Potato chips6,9000.15
Pretzels2,7000.12
Total15,600

If required, round all per-case answers to the nearest cent.

a. Determine the single plantwide factoryoverhead rate.
$ per processing hour

b. Use the factory overhead rate in (a) todetermine the amount of total and per-case factory overheadallocated to each of the three products under generally acceptedaccounting principles.

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

Answer & Explanation Solved by verified expert
3.9 Ratings (454 Votes)

a. Single plant wide factory overhead rate = estimated factory overhead rate/total processing hours

                                                                            =$105,786/1,959

                                                                            =$54 per processing hour

(note :selling and administrative are not overhead expense )

Total processing hours

Tortilla chips 6,000*0.10

600

Potato chips 6,900*0.15

1,035

Pretzels 2,700*0.12

324

Total hours

1,959

b)

Total factory overhead

Per case

Tortilla chips 600*54

$32,400                   (600.54)

$5.4                  (32,400/6,000)

Potato chips

$55,890                   (1,035*54)

$8.10                (55,890/6,900)

pretzels

$17,496                   (324*54)

$6.48              (17,496/2,700)

total

$105,786

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