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Aunt Lydia Snacks makes potato chips, corn chips, and cheese puffs using three different production lines within the same manufacturing plant. Currently, Aunt Lydia uses a single plantwide overhead rate to allocate its $$3,845,400$ of annual manufacturing overhead. Of this amount, $$1,785,000$ is associated with the potato chip line, $$1,310,400$ is associated with the corn chip line, and $$750,000$ is associated with the cheese puff line. Aunt Lydia's plant is currently running a total of $17,400$ machine hours: $10,500$ in the potato chip line, $3,150$ in the corn chip line, and $3,750$ in the cheese puff line. Aunt Lydia considers machine hours to be the cost driver of manufacturing overhead costs.

Read the requirements.

What is Aunt Lydia's plantwide overhead rate?

Determine the formula for calculating the plantwide overhead rate, then calculate the rate.

$=$ Plantwide overhead rate

$=$ per machine hour

Calculate the departmental overhead rates for Aunt Lydia's three production lines. Round all answers to the nearest cent.

Begin by determining the formula for calculating a departments overhead rate, then calculate the overhead rates for each department.

$\backslash$table$[[$Potato Chips,$\backslash$table$[[+],[+]],$Department overhead rate$],[=,$per machine hour$],[$Corn Chips,$*,=,$per machine hour$],[$Cheese Puffs,$+,=,$per machine hour$]]$

Which products have been overcosted by the plantwide rate? Which products have been undercosted by the plantwide rate?

For each product, select if it was overcosted or undercosted by using the plantwide rate.

Product Line Overcosted or

Undercosted

Potato Chip

Corn Chip

Cheese Puffs

Requirements

What is Aunt Lydia's plantwide overhead rate?

Calculate the departmental overhead rates for Aunt Lydia's three production lines. Round all answers to the nearest cent.

Which products have been overcosted by the plantwide rate? Which products have been undercosted by the plantwide rate?