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 $33,782.00 2 indirect labor 84,456.00 3 factory electricity 8,446.00 4 indirect materials 40,356.00 5 selling expenses 26,900.00 6 administrative expenses 17,200.00 7 total costs $211,140.00 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 3,600 0.25 potato chips 5,300 0.11 pretzels 2,300 0.49 total 11,200 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 cen

a)

Determine the single plant wide factory overhead rate.

\begin{array}{c}\\\left. \begin{array}{l}\\{\rm{Single plant wide }}{\rm{factory overhead rate}}\\\end{array} \right\} = \frac{{{\rm{Total factory overhead{{{\rm{Total processing hours = \frac{{\$ 153,000}}{{2,550}} = \$ 60{\rm{ per processing hour}}\\\end{array}  

Singleplantwide

factoryoverheadrate

​    

⎭

⎪

⎪

⎬

⎪

⎪

⎫

​  =  

Totalprocessinghours

Totalfactoryoverhead

​  

=  

2,550

$153,000

​  

=$60perprocessinghour

​  

Therefore, single plant wide factory overhead rate is $60 per processing hour.

Workings:

Calculation of total factory overhead rate:

\begin{array}{c}\\\left. \begin{array}{l}\\{\rm{Total factory }}{\rm{overhead}}\\\end{array} \right\}{\rm{ = }}\left( \begin{array}{l}\\{\rm{Factory depreciation + Indirect labor }}{\rm{ + Factory electricity + Indirect material}}\\\end{array} \right) = \$ 31,360 + \$ 78,400 + \$ 7,840 + \$ 35,400 = \$ 153,000\\\end{array}  

Totalfactory

overhead

​    

⎭

⎪

⎪

⎬

⎪

⎪

⎫

​  =  

⎝

⎜

⎜

⎛

​    

Factorydepreciation+Indirectlabor

+Factoryelectricity+Indirectmaterial

​    

⎠

⎟

⎟

⎞

​  

=$31,360+$78,400+$7,840+$35,400

=$153,000

​  

Therefore, total factory overhead is $153,000.

Calculation of processing hours:

\begin{array}{c}\\{\rm{Processing hours = }}\left( \begin{array}{l}\\{\rm{Budgeted volume}} \times {\rm{Processing hours per case}}\\\end{array} \right) = 4,000 \times 0.20 + 5,000 \times 0.15 + 2,500 \times 0.40 = 800 + 750 + 1,000 = 2,550{\rm{ hours}}\\\end{array}  

Processinghours=  

⎝

⎜

⎜

⎛

​    

Budgetedvolume

×Processinghourspercase

​    

⎠

⎟

⎟

⎞

​  

=4,000×0.20+5,000×0.15+2,500×0.40

=800+750+1,000

=2,550hours

​  

Therefore, there are 2,550 processing hours.

Explanation | Common mistakes | Hint for next step

It is given that factory depreciation is $31,360, indirect labor is $78,400, factory electricity is $7,840 and indirect material is $35,400. Therefore, total factory overhead rate is $153,000. Total processing hours are calculated by multiplying budgeted volume with processing hours. Total factory overhead rate is divided by total processing hour. Therefore, Single plant wide factory overhead rate is $60 per processing hour.

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