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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 $9,017
Indirect labor 22,346
Factory electricity 2,548
Indirect materials 5,293
Selling expenses 12,545
Administrative expenses 7,057
Total costs $58,806
Factory overhead is allocated to the three products on the basis of processing hours. The products had the following production budget and processing hours per case:
Types of Snacks Budgeted Volume
(Cases) Processing Hours
per Case
Tortilla chips 1,800 0.12
Potato chips 2,100 0.15
Pretzels 3,600 0.10
Total 7,500
If required, round all per-case answers to the nearest cent.
a. Determine the single plantwide factory overhead rate.
fill in the blank 1 of 1$
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$
Potato chips fill in the blank 3 of 7
fill in the blank 4 of 7
Pretzels fill in the blank 5 of 7
fill in the blank 6 of 7
Total fill in the blank 7 of 7$
Question Content Area
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 $9,017
Indirect labor 22,346
Factory electricity 2,548
Indirect materials 5,293
Selling expenses 12,545
Administrative expenses 7,057
Total costs $58,806
Factory overhead is allocated to the three products on the basis of processing hours. The products had the following production budget and processing hours per case:
Types of Snacks Budgeted Volume
(Cases) Processing Hours
per Case
Tortilla chips 1,800 0.12
Potato chips 2,100 0.15
Pretzels 3,600 0.10
Total 7,500
If required, round all per-case answers to the nearest cent.
a. Determine the single plantwide factory overhead rate.
fill in the blank 1 of 1$
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$
Potato chips fill in the blank 3 of 7
fill in the blank 4 of 7
Pretzels fill in the blank 5 of 7
fill in the blank 6 of 7
Total fill in the blank 7 of 7$
Answers
Answered by
GPT-4o mini
To determine the single plantwide factory overhead rate and the amount of total and per-case overhead allocated to each of the three products, we will follow these steps:
### a. Determine the single plantwide factory overhead rate.
1. **Total Factory Overhead Costs**: We need to sum up all the factory overhead costs provided.
- Factory depreciation: $9,017
- Indirect labor: $22,346
- Factory electricity: $2,548
- Indirect materials: $5,293
Total Factory Overhead Costs = $9,017 + $22,346 + $2,548 + $5,293 = **$39,204**
2. **Total Budgeted Processing Hours**: We will calculate the total processing hours based on the production budget.
- Tortilla chips: 1,800 cases * 0.12 hours/case = 216 hours
- Potato chips: 2,100 cases * 0.15 hours/case = 315 hours
- Pretzels: 3,600 cases * 0.10 hours/case = 360 hours
Total Processing Hours = 216 + 315 + 360 = **891 hours**
3. **Single Plantwide Factory Overhead Rate**: This is calculated as follows:
\[
\text{Factory Overhead Rate} = \frac{\text{Total Factory Overhead Costs}}{\text{Total Budgeted Processing Hours}}
\]
\[
\text{Factory Overhead Rate} = \frac{39,204}{891} \approx 44.00
\]
So, the single plantwide factory overhead rate is **$44.00 per processing hour**.
### b. Use the overhead rate in (a) to determine the total and per-case overhead allocated to each of the three products.
1. **Total Factory Overhead for Each Product**:
- Tortilla chips:
- Processing Hours: 1,800 cases * 0.12 hours/case = 216 hours
- Total Overhead: 216 hours * $44.00/hour = $9,504
- Potato chips:
- Processing Hours: 2,100 cases * 0.15 hours/case = 315 hours
- Total Overhead: 315 hours * $44.00/hour = $13,860
- Pretzels:
- Processing Hours: 3,600 cases * 0.10 hours/case = 360 hours
- Total Overhead: 360 hours * $44.00/hour = $15,840
2. **Per-Case Factory Overhead**:
- Tortilla chips:
- Per Unit Overhead: $9,504 / 1,800 cases = **$5.28**
- Potato chips:
- Per Unit Overhead: $13,860 / 2,100 cases = **$6.60**
- Pretzels:
- Per Unit Overhead: $15,840 / 3,600 cases = **$4.40**
### Summary of Allocations
| Types of Snacks | Total Factory Overhead | Per Unit Factory Overhead Case |
|---------------------|-----------------------|-------------------------------|
| Tortilla chips | $9,504 | $5.28 |
| Potato chips | $13,860 | $6.60 |
| Pretzels | $15,840 | $4.40 |
| **Total** | **$39,204** | |
Now we can fill in the blanks with the calculated values:
- Tortilla chips: Total Factory Overhead = **$9,504**, Per Unit Factory Overhead Case = **$5.28**
- Potato chips: Total Factory Overhead = **$13,860**, Per Unit Factory Overhead Case = **$6.60**
- Pretzels: Total Factory Overhead = **$15,840**, Per Unit Factory Overhead Case = **$4.40**
- Total Factory Overhead = **$39,204**
### a. Determine the single plantwide factory overhead rate.
1. **Total Factory Overhead Costs**: We need to sum up all the factory overhead costs provided.
- Factory depreciation: $9,017
- Indirect labor: $22,346
- Factory electricity: $2,548
- Indirect materials: $5,293
Total Factory Overhead Costs = $9,017 + $22,346 + $2,548 + $5,293 = **$39,204**
2. **Total Budgeted Processing Hours**: We will calculate the total processing hours based on the production budget.
- Tortilla chips: 1,800 cases * 0.12 hours/case = 216 hours
- Potato chips: 2,100 cases * 0.15 hours/case = 315 hours
- Pretzels: 3,600 cases * 0.10 hours/case = 360 hours
Total Processing Hours = 216 + 315 + 360 = **891 hours**
3. **Single Plantwide Factory Overhead Rate**: This is calculated as follows:
\[
\text{Factory Overhead Rate} = \frac{\text{Total Factory Overhead Costs}}{\text{Total Budgeted Processing Hours}}
\]
\[
\text{Factory Overhead Rate} = \frac{39,204}{891} \approx 44.00
\]
So, the single plantwide factory overhead rate is **$44.00 per processing hour**.
### b. Use the overhead rate in (a) to determine the total and per-case overhead allocated to each of the three products.
1. **Total Factory Overhead for Each Product**:
- Tortilla chips:
- Processing Hours: 1,800 cases * 0.12 hours/case = 216 hours
- Total Overhead: 216 hours * $44.00/hour = $9,504
- Potato chips:
- Processing Hours: 2,100 cases * 0.15 hours/case = 315 hours
- Total Overhead: 315 hours * $44.00/hour = $13,860
- Pretzels:
- Processing Hours: 3,600 cases * 0.10 hours/case = 360 hours
- Total Overhead: 360 hours * $44.00/hour = $15,840
2. **Per-Case Factory Overhead**:
- Tortilla chips:
- Per Unit Overhead: $9,504 / 1,800 cases = **$5.28**
- Potato chips:
- Per Unit Overhead: $13,860 / 2,100 cases = **$6.60**
- Pretzels:
- Per Unit Overhead: $15,840 / 3,600 cases = **$4.40**
### Summary of Allocations
| Types of Snacks | Total Factory Overhead | Per Unit Factory Overhead Case |
|---------------------|-----------------------|-------------------------------|
| Tortilla chips | $9,504 | $5.28 |
| Potato chips | $13,860 | $6.60 |
| Pretzels | $15,840 | $4.40 |
| **Total** | **$39,204** | |
Now we can fill in the blanks with the calculated values:
- Tortilla chips: Total Factory Overhead = **$9,504**, Per Unit Factory Overhead Case = **$5.28**
- Potato chips: Total Factory Overhead = **$13,860**, Per Unit Factory Overhead Case = **$6.60**
- Pretzels: Total Factory Overhead = **$15,840**, Per Unit Factory Overhead Case = **$4.40**
- Total Factory Overhead = **$39,204**
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