NatureMade Snacks just received an order to produce 12,000 single-serving bags of gourmet, fancy-cut, sweet potato chips. The order will require 21 preparation hours and 36 cooking and draining hours. Use the activity rates you calculated in S4-4 to compute the following: What is the total amount of manufacturing overhead that should be allocated to this order? How much manufacturing overhead should be assigned to each bag? What other costs will the company need to consider to determine the total manufacturing costs of this order?

Instructions are lsited below.

Explanation:

Giving the following information:

Production = 12,000 single-serving bags of gourmet, fancy-cut, sweet potato chips.

The order will require 21 preparation hours and 36 cooking and draining hours.

We were not provided with enough information to solve the requirements. But, I will leave the formulas and an example to guide you.

First, we need to calculate the estimated manufacturing overhead rate for each department:

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

For example:

Preparation:

Estimated overhead = 100,000

Estimated preparation hours = 2,000

Estimated manufacturing overhead rate = 100,000/2,000 = $50 per preparation hour

Cooking:

Estimated overhead = 175,000

Estimated cooking hours = 10,000

Estimated manufacturing overhead rate = 175,000/10,000 = $17.5 per direct cooking hour.

Now, we can allocate overhead to the special order:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Preparation = 50*21 = $1,050

Cooking = 17.5*36 = $630

Unitary overhead = (1,050 + 630) / 12,000 = $0.14 per bag

The total manufacturing costs include direct labor, direct materials and allocated overhead:

Total manufacturing cost = direct material + direct labor + allocated overhead

For example:

DM = 300,000

DL = 200,000

Overhead = 1,680

Total manufacturing cost = 300,000 + 200,000 + 1,680 = $501,680