Exercise 2-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs

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:

  

  

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:

  

  

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 130% 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?

Molding Fabrication Total Machine-hours 26,000 36,000 62,000 Fixed manufacturing overhead costs $ 800,000 $ 230,000 $ 1,030,000 Variable manufacturing overhead cost per machine-hour $ 5.10 $ 5.10

Explanation / Answer

Solution 1a

Total estimated overhead = (62000 * $5.1) + $1,030,000 = $1,346,200

Predetermined overhead rate =Estimated overhead / Estimated machine hours = $1,346,200 / 62000 = $21.71 per machine hour

solution 1b:

Solution 1c:

solution d:

Delph's cost of goods sold = $1,639,460 + $1,611,560 = $3,251,020

Compuatation of manufacturing cost assigned to Job - Delph Particulars Job D70 Job C200 Direct Material $695,000.00 $460,000.00 Direct Labor $380,000.00 $370,000.00 Manufacturing overhead
D70 - 26000 * $21.71
C200 - 36000*$21.71 $564,460.00 $781,560.00 Total Manufacturing cost $1,639,460.00 $1,611,560.00

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