Question

# Exercise 2-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs [LO2-1, LO2-2, LO2-3,LO2-4] [The following information...

Exercise 2-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs [LO2-1, LO2-2, LO2-3,LO2-4]

[The following information applies to the questions displayed below.]

Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company provided the following estimates at the beginning of the year:

 Molding Fabrication Total Machine-hours 20,000 30,000 50,000 Fixed manufacturing overhead costs \$ 700,000 \$ 210,000 \$ 910,000 Variable manufacturing overhead cost per machine-hour \$ 3.00 \$ 1.00

During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-70 and Job C-200. It provided the following information related to those two jobs:

 Job D-70: Molding Fabrication Total Direct materials cost \$ 375,000 \$ 325,000 \$ 700,000 Direct labor cost \$ 200,000 \$ 160,000 \$ 360,000 Machine-hours 14,000 6,000 20,000

 Job C-200: Molding Fabrication Total Direct materials cost \$ 300,000 \$ 250,000 \$ 550,000 Direct labor cost \$ 175,000 \$ 225,000 \$ 400,000 Machine-hours 6,000 24,000 30,000

Required:

1. Assume Delph uses a plantwide predetermined overhead rate based on machine-hours.

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

c. If Delph establishes bid prices that are 150% of total manufacturing cost, what bid prices would it have established for Job D-70 and Job C-200?

d. What is Delph’s cost of goods sold for the year?

1-a. Plantwide predetermined overhead rate: \$20 per machine hour

 Fixed manufacturing overhead costs 910000 Variable manufacturing overhead costs: Molding (20000 x \$3) 60000 Fabrication (30000 x \$1) 30000 Total manufacturing overhead costs \$ 1000000 ÷ Machine hours 50000 Plantwide predetermined overhead rate \$ 20

1-b.

 Job D-70 Job C-200 Direct materials 700000 550000 Direct labor 360000 400000 Manufacturing overheads 400000 600000 (20000 x \$20) (30000 x \$20) Total manufacturing cost \$ 1460000 1550000

1-c.

 Job D-70 Job C-200 Total manufacturing cost \$ 1460000 1550000 Bid Price \$ 2190000 2325000 (\$1460000 x 150%) (\$1550000 x 150%)

1-d. Cost of goods sold = \$1460000 + \$1550000 = \$3010000