Single plantwide factory overhead rate

Scrumptious Snacks Inc. manufactures three types of snack foods: tortilla chips, potato chips, and pretzels. The company has budgeted the following costs for the upcoming period:

Line Item Description Amount

Factory depreciation $$19,764$

Indirect labor $48,981$

Factory electricity $5,586$

Indirect materials $11,601$

Selling expenses $27,498$

Administrative expenses $15,468$

Total costs $$128,898$

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:

Types of Snacks Budgeted Volume

$($Cases$)$ Processing Hours

per Case

Tortilla chips $5,4000\mathrm{.}10$

Potato chips $6,9000\mathrm{.}12$

Pretzels $3,9000\mathrm{.}15$

Total $16,200$

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

a$.$ Determine the single plantwide factory overhead rate.

fill in the blank $1$ of $1$$

$44$

per processing hour

b$.$ Use the overhead rate in $($a$)$ to determine the amount of total and per$-$case overhead allocated to each of the three products under generally accepted accounting principles.

Types of Snacks Total

Factory Overhead Per Unit

Factory Overhead Case

Tortilla chips fill in the blank $1$ of $7$$

fill in the blank $2$ of $7$$

$4\mathrm{.}40$

Potato chips fill in the blank $3$ of $7$

fill in the blank $4$ of $7$

$5\mathrm{.}28$

Pretzels fill in the blank $5$ of $7$

fill in the blank $6$ of $7$

Total fill in the blank $7$ of $7$$

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a$.$ First calculate:

Budgeted production volume for each product $\backslash$times Processing hours. Add together to obtain total processing hours.

Recall that factory overhead does not include selling and administrative expenses. Divide the total of overhead costs by total processing hours to obtain the overhead rate.

b$.$ Calculate:

Overhead Rate in Req. $($a$)\backslash$times Processing hours for each product $=$ Overhead for each. Add all overhead amounts to obtain the total. Divide individual overhead amounts by budgeted production volume for each product to obtain overhead per unit.

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