In: Accounting
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 cost | $ | 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 | |||
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 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?