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		31,000		41,000		72,000
Fixed manufacturing overhead costs	$	740,000	$	210,000	$	950,000
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	$	378,000	$	322,000	$	700,000
Direct labor cost	$	230,000	$	160,000	$	390,000
Machine-hours		24,000		7,000		31,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	290,000	$	230,000	$	520,000
Direct labor cost	$	160,000	$	270,000	$	430,000
Machine-hours		7,000		34,000		41,000

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.

Answer 1

• Requirement 1

Part A

A	Variable Overhead rate	$                              5.50	$                             5.50
B	Total machine hours	31,000	41,000	72,000
C = A x B	Total Variable Overhead	$                       170,500	$                      225,500	$                396,000
D	Total Fixed Overheads	$                       740,000	$                      210,000	$                950,000
E = C+D	Total manufacturing Overhead			$            1,346,000
F	Total machine hours			72,000
G = E/F	Plant Wide Overhead rate			$                    18.69	Answer

Part B

	Job D 70	Job C 200
Molding Department:
Direct material cost	$                       378,000	$                      290,000
Direct Labor cost	$                       230,000	$                      160,000
Manufacturing Overhead	$                       448,560	$                      130,830
Fabrication Department:
Direct material cost	$                       322,000	$                      230,000
Direct Labor cost	$                       160,000	$                      270,000
Manufacturing Overhead	$                       130,830	$                      635,460
Total manufacturing cost assigned	$                   1,669,390	$                  1,716,290	ANSWERS