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:

Factory depreciation		$22,963
Indirect labor		56,909
Factory electricity		6,490
Indirect materials		13,478
Selling expenses		31,949
Administrative expenses		17,971
	Total costs	$149,760

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			6,000			0.12
Potato chips			2,400			0.15
Pretzels			4,800			0.10
	Total		13,200

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

a. Determine the single plantwide factory overhead rate. $

fill in the blank 1

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.

	Total Factory Overhead	Per-Case Factory Overhead
Tortilla chips	$ fill in the blank 2	$ fill in the blank 3
Potato chips	fill in the blank 4	fill in the blank 5
Pretzels	fill in the blank 6	fill in the blank 7
Total	$ fill in the blank 8

Answer and steps

A:

Multiply the volume of each product (tortilla, potato, pretzels) by the hours per case for total Per-Case Factory Overhead.

Tortilla chips 6,000 X 0.12 = 720

Potato Chips 2,400 X 0.15 = 360

Pretzels 4,800 X 0.10 = 480

Add for a total of 1,560.

This next step divides the cost of factory depreciation, indirect labor, factory electricity, and indirect materials by 1,560. Selling expenses and administrative expenses are not to be included, so subtract them from the provided $149,760 total. The remaining total is $99,840.

Divide $99,840 by 1,560 = 64. $64 per processing hour.

B:

Now, multiply $64 by each product total

Tortilla: 64 X 720 = 46,080

Potato chips: 64 X 360 = 23,040

Pretzels: 64 X 480 = 30,720

Total factory overhead is 99, 840 (46,080 + 23,040 + 30,720)

Next, divide by volume of product for the per-case factory overhead

Tortilla: 46,080 / 6,000 (volume) = $7.68

Potato chips: 23,040 / 2,400 = $9.60

Pretzels: 30,720 / 4,800 = $6.40