Salty Sensations Snacks Company manufactures three types of snack foods: tortill
ID: 2562281 • Letter: S
Question
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
$35,101.00
2
Indirect labor
87,752.00
3
Factory electricity
8,775.00
4
Indirect materials
47,552.00
5
Selling expenses
25,200.00
6
Administrative expenses
15,000.00
7
Total costs
$219,380.00
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:
* If required, round your answers to the nearest cent.
A. Determine the single plantwide factory overhead rate. If required, round your answer to the nearest cent.
$ 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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. If required, round your answer to the nearest cent.
1
Total Factory Overhead
Per Case Factory Overhead
2
3
4
5
1
Factory depreciation
$35,101.00
2
Indirect labor
87,752.00
3
Factory electricity
8,775.00
4
Indirect materials
47,552.00
5
Selling expenses
25,200.00
6
Administrative expenses
15,000.00
7
Total costs
$219,380.00
Explanation / Answer
a.
Budgeted Volume (Cases)
Processing Hours per Case
Total processing hours
Tortilla chips
3,600
0.19
684
Potato chips
5,500
0.19
1045
Pretzels
2,700
0.43
1161
Total
2890
Total overhead cost to be allocated = Factory depreciation + Indirect labor + Factory electricity + Indirect materials = $35,101 + $87,752 + $8,775 + $47,552 = $179,180
Single plant wide factory overhead rate = Total overhead cost/Total processing hours = $179,180/2,890 hours = $62 per processing hour
b.
Total processing hours
Overhead rate
Total overhead allocated
Budgeted Volume (Cases)
Overhead allocated per case
Tortilla chips
684
$ 62.00
$ 42,408.00
3,600
$ 11.78
Potato chips
1045
$ 62.00
$ 64,790.00
5,500
$ 0.19
Pretzels
1161
$ 62.00
$ 71,982.00
2,700
$ 0.43
Total
$ 179,180.00
Budgeted Volume (Cases)
Processing Hours per Case
Total processing hours
Tortilla chips
3,600
0.19
684
Potato chips
5,500
0.19
1045
Pretzels
2,700
0.43
1161
Total
2890
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