Question

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		33,000		43,000		76,000
Fixed manufacturing overhead costs	$	800,000	$	200,000	$	1,000,000
Variable manufacturing overhead cost per machine-hour	$	5.70	$	5.70

  

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	$	379,000	$	330,000	$	709,000
Direct labor cost	$	220,000	$	130,000	$	350,000
Machine-hours		24,000		9,000		33,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	210,000	$	260,000	$	470,000
Direct labor cost	$	170,000	$	240,000	$	410,000
Machine-hours		9,000		34,000		43,000

Delph had no underapplied or overapplied manufacturing overhead during the year.

Exercise 2-15 Part 1

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 140% 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?

Brewer 8e Rechecks 2018-08-21

Answer 1

1a) Plantwide overhead rate = 1000000/76000+5.70 = 18.86 per MH

1b) Total manufacturing cost

	Job D-70	Job C-200
Direct material	709000	470000
Direct labor	350000	410000
Overhead	622380	810980
Total manufacturing cost	1681380	1690980

1c) Bid price

Job D-70 = 1681380*1.4 = 2353932

Job C-200 = 1690980*1.4 = 2367372

1d) Cost of goods sold = 1681380+1690980 = 3372360