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 2

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 140% 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 1

2a	Departmental predetermined overhead rates
	Molding department
	Fixed manufacturing overhead			(740,000/31000)		23.87
	Variable manufacturing overhea					5.50
	predetermined overhead rate					29.37
	Fabrication department
	Fixed manufacturing overhead			(210000/41000)		5.12
	Variable manufacturing overhea					5.50
	predetermined overhead rate					10.62
	Molding department			29.37	per MH
	Fabrication department			10.62	per MH
2b)	total manufacturing cost assinged
					job D-70
					molding	Fabrication	total
	Direct materials cost				378,000	322,000	700,000
	direct labor cost				230,000	160,000	390,000
	overhead assigned
	molding				704903		704903
	Fabrication					74354	74354
	total manufacturing cost				1,312,903	556,354	1,869,257
	job c-200
					molding	Fabrication	total
	Direct materials cost				290,000	230,000	520,000
	direct labor cost				160,000	270,000	430,000
	overhead assigned
	molding	32.43*8000			205596.8		205596.8
	Fabrication 11.59*28000	12.84*30,000				361146.3	361146.3
	total manufacturing cost				655,597	861,146	1,516,743
				total manufacturing
				cost
	job D-70			1,869,257
	Job C-200			1,516,743
2c)	Bid price
				cost
	job D-70			2,616,960
	Job C-200			2,123,440
2d)	cost of goods sold			3,386,000