Question

Salty Sensations Snacks Company manufactures three types of snack foods: tortilla chips, potato chips, and pretzels. The company has budgeted the following costs for the upcoming period: 1 Factory depreciation $25,888.00 2 Indirect labor 64,720.00 3 Factory electricity 6,472.00 4 Indirect materials 25,020.00 5 Selling expenses 24,100.00 6 Administrative expenses 15,600.00 7 Total costs $161,800.00 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 4,000 0.15 Potato chips 4,700 0.12 Pretzels 2,400 0.44 Total 11,100 Required: a. Determine the single plantwide factory overhead rate.* b. Use the factory overhead rate in (a) to determine the amount of total and per-case factory overhead allocated to each of the three products under generally accepted accounting principles. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.* * If required, round your answers to the nearest cent.

Answer 1

a. Total factory overhead : $ 122,100

Total processing hours = 4,000 x 0.15 + 4,700 x 0.12 + 2,400 x 0.44 = 2,220.

Plantwide factory overhead rate = $ 122,100 / 2,220 processing hours = $ 55 per processing hour.

Factory Depreciation	$ 25,888
Indirect Labor	64,720
Factory Electricity	6,472
Indirect Materials	25,020
Total Factory Overhead Costs	$ 122,100

b.

	Tortilla Chips	Potato Chips	Pretzels
Total Allocated Factory Overhead	$ 33,000	$ 31,020	58,080
Factory Overhead Allocated per Case	$ 8.25 per case	$ 6.60 per case	$ 24.20 per case

Tortilla chips :

Total Allocated Factory Overhead :4,000 cases x 0.15 processing hours per case x $ 55 per processing hour = $ 33,000.

Overhead allocated per case = $ 33,000 / 4,000 = $ 8.25 per case