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Required 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		31,000		41,000		72,000
Fixed manufacturing overhead costs	$	710,000	$	280,000	$	990,000
Variable manufacturing overhead cost per machine-hour	$	5.50	$	5.50

  

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	$	371,000	$	325,000	$	696,000
Direct labor cost	$	230,000	$	130,000	$	360,000
Machine-hours		25,000		6,000		31,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	220,000	$	290,000	$	510,000
Direct labor cost	$	130,000	$	240,000	$	370,000
Machine-hours		6,000		35,000		41,000

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

2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.

a. Compute the departmental predetermined overhead rates.

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?

required 2A- compute the departmental predetermined overhead rates. (Round the final answers to 2 decimal places.)

required 2B- Compute the total manufacturing cost assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places. Round your final answers to nearest whole dollar amount.)

required 2C- 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? (Round your intermediate calculations to 2 decimal places. Round your final answers to nearest whole dollar amount.)

required 2D- What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places. Round your final answer to nearest whole dollar amount.)

Answer 1

a
	Predetermined overhead rate
Molding Department	28.40	=5.5+(710000/31000)
Fabrication Department	12.33	=5.5+(280000/41000)
b
	Job D-70	Job C-200
Direct materials cost	696000	510000
Direct labor cost	360000	370000
Overhead:
Molding Department	710000	170400
Fabrication Department	73980	431550
Total manufacturing cost	1839980	1481950
c
	Job D-70	Job C-200
Total manufacturing cost	1839980	1481950
Add: Markup @50%	919990	740975
Bid prices	2759970	2222925
d
Total manufacturing cost Job D-70	1839980
Total manufacturing cost Job C-200	1481950
Cost of goods sold	3321930
Workings:
Overhead applied:
Job D-70
Molding Department = 25000*28.4 = 710000
Fabrication Department = 6000*12.33 = 73980
Job C-200
Molding Department = 6000*28.4 = 170400
Fabrication Department = 35000*12.33 = 431550