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Problem - Single plantwide factory overhead rate - Krispy Treats Snack Food 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 $12,900
Indirect labor 32,150
Factory electricity 3,500
Indirect materials 6,650
Selling expenses 18,000
Administrative expenses 9,600
Total costs $82,800
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
2,500
0.12
Potato Chips
4,400
0.10
Pretzels
1,200
0.15
Total
8,100
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.
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