Snyder Snacks makes potato chips, corn chips, and cheese puffs using three different pro - duction lines within the same manufacturing plant. Currently, Snyder uses a single plant - wide overhead rate to allocate its $3,311,500 of annual manufacturing overhead. Of this amount, $2,070,000 is associated with the potato chip line, $763,000 is associated with the corn chip line, and $478,500 is associated with the cheese puff line. Snyder's plant is currently running a total of 17,900 machine hours: 11,500 in the potato chip line, 3,500 in the corn chip line, and 2,900 in the cheese puff line. Snyder considers machine hours to be the cost driver of manufacturing overhead c

1. What is Snyder's plantwide overhead rate?

2. Calculate the departmental overhead rates for Snyder's three production lines. Round S4-3 all answers to the nearest cent.

3. Which products have been overcosted by the plantwide rate? Which products have been undercosted by the plantwide rate?

Question

Business

Kaylyn

10 July, 21:21

Snyder Snacks makes potato chips, corn chips, and cheese puffs using three different pro - duction lines within the same manufacturing plant. Currently, Snyder uses a single plant - wide overhead rate to allocate its $3,311,500 of annual manufacturing overhead. Of this amount, $2,070,000 is associated with the potato chip line, $763,000 is associated with the corn chip line, and $478,500 is associated with the cheese puff line. Snyder's plant is currently running a total of 17,900 machine hours: 11,500 in the potato chip line, 3,500 in the corn chip line, and 2,900 in the cheese puff line. Snyder considers machine hours to be the cost driver of manufacturing overhead c

1. What is Snyder's plantwide overhead rate?

2. Calculate the departmental overhead rates for Snyder's three production lines. Round S4-3 all answers to the nearest cent.

3. Which products have been overcosted by the plantwide rate? Which products have been undercosted by the plantwide rate?

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Answers (1)

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Bates · Answer 1

1. Plant overhead rate=Annual manufacturing overhead/total machine hours=$3311500/17900=$185/hour.

2. a) Potato chip line=$2070000/11500=$180/hour

b) Corn chip line = $763000/3500 = $ 218/hour

c) Cheese stuff line = $478500/2900 = $ 165 / hour

Explanation:

1. we can find plant wide overhead rate by dividing overhead by machine hours.

2. we can find departmental overhead rate with respect to each departmental overhead and their machine hours.

3. Corn chip line have been over costed because more resource are used in corn line than plant wide.

4. Cheese stuff line have been under costed because less resources are used than plant wide.