Question
Grandpa Jack produces different styles of potato chips (ruffled, flat, thick-cut, and gourmet) for different corporate customers. Each style of potato chip requires different preparation
Grandpa Jack produces different styles of potato chips (ruffled, flat, thick-cut, and gourmet) for different corporate customers. Each style of potato chip requires different preparation times, different cooking and draining times (depending on desired fat content), and different packaging (single serving versus bulk). Therefore, Grandpa Jack has decided to use ABC costing to better capture the manufacturing overhead costs incurred by each style of chip. Grandpa Jack just received an order to produce 14,000 single-serving bags of gourmet, fancy-cut, low-fat potato chips. The order will require 14 preparation hours and 40 cooking and draining hours. The cost allocation rate for each activity is provided in the accompanying table. (Click the icon to view the relevant activity rates.) Requirements 1. What is the total amount of MOH that should be allocated to this order? 2. How much MOH should be assigned to each bag? 3. What other costs will Grandpa Jack need to consider to determine the total manufacturing costs of this order? Requirement 1. What is the total amount of MOH that should be allocated to this order? Determine the basic formula needed to allocate overhead to this order, then compute the overhead allocated to each activity. (Round all intermediary calculations to two decimal places as needed. Round your final answers to the nearest whole dollar.) Allocated manufacturing x overhead Activity Rates Preparation x Cooking/draining x Packaging x Activity The total amount of manufacturing overhead assigned to this order is $. Activity Cost Allocation Rate Base Units Preparation S 38.00 Requirement 2. How much MOH should be assigned to each bag? Cooking and draining S 22.00 Determine the formula needed to calculate manufacturing overhead to be assigned to each bag, and then compute the manufacturing overhead per bag. (Round you Packaging S 0.09 per hour of preparation per hour of cook and drain per unit packaged Manufacturing overhead per unit Requirement 3. What other costs will Grandpa Jack need to consider to determine the total manufacturing costs of this order? In addition to the costs above, Grandpa Jack needs to consider Print Done
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