Exercise 3-17 Plantwide and Departmental Overhead Rates; Job Costs [LO3-1, LO3-2
ID: 2472840 • Letter: E
Question
Exercise 3-17 Plantwide and Departmental Overhead Rates; Job Costs [LO3-1, LO3-2, LO3-3]
[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 costs $ 700,000 $ 210,000 $ 910,000
Variable manufacturing overhead per machine-hour $ 3.00 $ 3.00
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 overapplied or underapplied manufacturing overhead during the year.
Assume Delph uses a plantwide overhead rate based on machine-hours.
Compute the predetermined plantwide overhead rate
Compute the total manufacturing costs assigned to Job D-70 and Job C-200.
If Delph establishes bid prices that are 150% of total manufacturing costs, what bid price would it have established for Job D-70 and Job C-200?
What is Delph’s cost of goods sold for the year?
Explanation / Answer
Plantwide overhead rate = 910,000/50,000
= $18.20
Total plantwide rate = 18.20 + 3.00 = $21.20
Total manufacturing cost
Job D-70
Job C- 200
Direct material
700,000
550,000
Direct labor
360,000
400,000
Factory overhead
424,000
636,000
Total manufacturing cost
1,484,000
1,586,000
Bid price $2,226,000 $2379,000
Cost of goods sold = $3,070,000
Plantwide overhead rate = 910,000/50,000
= $18.20
Total plantwide rate = 18.20 + 3.00 = $21.20
Total manufacturing cost
Job D-70
Job C- 200
Direct material
700,000
550,000
Direct labor
360,000
400,000
Factory overhead
424,000
636,000
Total manufacturing cost
1,484,000
1,586,000
Bid price $2,226,000 $2379,000
Cost of goods sold = $3,070,000
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