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 | 24,000 | 32,000 | 56,000 | ||||
Fixed manufacturing overhead cost | $ | 740,000 | $ | 200,000 | $ | 940,000 | |
Variable manufacturing overhead cost per machine-hour | $ | 3.00 | $ | 1.50 | |||
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 | $ | 370,000 | $ | 320,000 | $ | 690,000 |
Direct labor cost | $ | 240,000 | $ | 160,000 | $ | 400,000 |
Machine-hours | 16,000 | 8,000 | 24,000 | |||
Job C-200 | Molding | Fabrication | Total | |||
Direct materials cost | $ | 220,000 | $ | 240,000 | $ | 460,000 |
Direct labor cost | $ | 140,000 | $ | 240,000 | $ | 380,000 |
Machine-hours | 8,000 | 24,000 | 32,000 | |||
Delph had no underapplied or overapplied manufacturing overhead during the year.
rev: 07_21_2020_QC_CS-217627
Exercise 2-15 (Algo) Part 2
2. Assume Delph chooses to combine its departmental rates from requirement 1 into 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 costs, 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?
Answer
[a]
Working |
Molding Department: |
Fabrication Department: |
|
A |
Total Fixed Overheads |
$ 740,000 |
$ 200,000 |
B |
Total machine hours |
24,000 |
32,000 |
C = A/B |
Fixed overhead rate |
$ 30.83 |
$ 6.25 |
D |
Variable Overhead rate |
$ 3.00 |
$ 1.50 |
E = C+D |
Predetermined Departmental Overhead rates |
$ 33.83 |
$ 7.75 |
[b]
Job D 70 |
Job C 200 |
|
Molding Department: |
||
Direct material cost |
$ 370,000 |
$ 220,000 |
Direct Labor cost |
$ 240,000 |
$ 140,000 |
Manufacturing Overhead |
$ 541,280 |
$ 270,640 |
Fabrication Department: |
||
Direct material cost |
$ 320,000 |
$ 240,000 |
Direct Labor cost |
$ 160,000 |
$ 24,000 |
Manufacturing Overhead |
$ 62,000 |
$ 186,000 |
Total manufacturing cost assigned |
$ 1,693,280 |
$ 1,080,640 |
[c]
Job D 70 |
Job C 200 |
||
A |
Total manufacturing cost assigned |
$ 1,693,280 |
$ 1,080,640 |
B = A x 150% |
Bid Price |
$ 2,539,920 |
$ 1,620,960 |
[d]
Total manufacturing cost assigned |
|
Job D 70 |
$ 1,693,280 |
Job C 200 |
$ 1,080,640 |
Cost of Goods Sold |
$ 2,773,920 |
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