Snappy Snack Food Company manufactures three types of snack food: tortilla chips
ID: 2345939 • Letter: S
Question
Snappy Snack Food Company manufactures three types of snack food: tortilla chips, potato chips ,and pretzels. the company has budgeted the following cots for the upcoming period:Factory depreciation $115,500
Indirect Labor 336,600
Factory electricity 43,400
Indirect materials 72,900
Selling expenses 171,000
Administrative expenses 92,800
Total costs $832,200
Factory overhead is allocated to the three products on the basis of processing hours. The product had the following production budget and processing hours per case:
Budgeted Production Processing Hour
Volume Cases) per Case
Tortilla chips 16,000 0.14
Potato chips 34,000 0.18
Pretzels 12,000 0.12
Total 62,000
(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 too each of the three products under generally accepted accounting principles.
Explanation / Answer
Budg. Prod. Proc. hour Total Proc.
(Volume cases) (Per case) hours
Tortilla chips 16,000 0.14 2,240
Potato chips 34,000 0.18 6,120
Pretzels chips 12,000 0.12 1,440
Total 62,000 9,800
Factory overhead
Factory depreciation $115,500
Indirect Labor $336,600
Factory electricity $43,400
Indirect materials $72,900
Total $568,400
(a) Determine the single plantwide factory overhead rate
$568,400 / 9,800 = $58 per processing hour
(b) Use the factory overhead rate in (a) to determine the amount of total and per case factory overhead allocated too each of the three products under generally accepted accounting principles.
Total Per Case
Tortilla 2,240 x $58| $129,920|$129,920/16,000 =$8.12
Potato 6,120 x $58| $354,960|$354,960/34,000 =$10.44
Pretzels 1,440 x $58| $83,520 |$83,520/12,000 =$6.96
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