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
|
$ 31,360
|
|
Indirect labor
|
78,400
|
|
Factory electricity
|
7,840
|
|
Indirect materials
|
35,400
|
|
Selling expenses
|
25,000
|
|
Administrative expenses
|
18,000
|
|
Total costs
|
$196,000
|
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
|
0.20
|
|
Potato chips
|
5,000
|
0.15
|
|
Pretzels
|
2,500
|
0.40
|
Total 11,500
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.