Question

Single Plantwide Factory Overhead Rate

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:

Factory depreciation		$13,645
Indirect labor		33,817
Factory electricity		3,856
Indirect materials		8,010
Selling expenses		18,985
Administrative expenses		10,679
	Total costs	$88,992

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			1,500			0.15
Potato chips			3,600			0.12
Pretzels			2,700			0.10
	Total		7,800

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

a. Determine the single plantwide factory overhead rate.
$ per processing hour

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.

	Total Factory Overhead	Per-Case Factory Overhead
Tortilla chips	$	$
Potato chips
Pretzels
Total	$

Answer 1

Computation of total factory overhead

Factory depreciation	13,645
Indirect labor	33,817
Factory electricity	3,856
Indirect materials	8,010
TOTAL	59,328

Computation total hours

	Budgeted Volume	Processing Hours Per Case	Total hours
Tortilla chips	1500	0.15	225
Potato chips	3600	0.12	432
Pretzels	2700	0.10	270
Total	7800		927

a) Single plantwide factory overhead rate $ per processing hour = 59,328/927 = $ 64/hour

b)

	Total Factory Overhead	Per-Case Factory Overhead
Tortilla chips	225 x 64 = 14400	14400/1500 = 9.6 per case
Potato chips	432 x 64 = 27648	27648 / 3600 = 7.68 per case
Pretzels	270 x 64 = 17280	17280 / 2700 = 6.4 per case
TOTAL	59328