Exercise 3-17 Plantwide and Departmental Overhead Rates, Job Costs [LO3-1, LO3-2
ID: 2611370 • 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 72,000 Machine-hours Fixed manufacturing overhead costs Variable manufacturing overhead per machine-hour$5.90 31,000 41,000 $ 740,000 s 300,000 $ 1,040,0 $5.90 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: Direct materials cost 376,000 329,000 $705,000 Direct labor cost Machine-hours Molding Fabrication Total 230,000 $170,000 $400,000 22,000 9,000 31,000 Job C-200: Direct materials cost 280,000 270,000 $550,000 Direct labor cost Machine-hours Molding Fabrication Total 140,000 $270,000 $ 410,000 9,000 32,000 41,000 Delph had no overapplied or underapplied manufacturing overhead during the year. ReferencesExplanation / Answer
Answer:
1)
a. Compute the predetermined plantwide overhead rate.
Calculation of Plantwide Predetermined Overhead Rate:
Overhead Rate
= Total Fixed Manufacturing Expenses / Total Machine Hours + Variable Rate per Hour
Overhead Rate
= 1,040,000 / 72,000 + 5.9
= $20.34 per Machine Hour
b.
Compute the total manufacturing costs assigned to Job D-70 & Job C-200.
Job D-70
Job C-200
Direct Material Cost
705,000
550,000
Direct Labor Cost
400,000
410,000
Manufacturing Overhead
630540
833940
(20.34*31000)
(20.34*41000)
Total Cost Assigned
1,735,540
1,793,940
c.
If delph establishes bid prices that are 150% of the total manufacturing costs, what price would it have established for Job D-70 & Job C-200?
Job D-70
Job C-200
Total Manufacturing Cost
1,735,540
1,793,940
Add: Margin (40%)
694,216
717,576
Bid Price
2,429,756
2,511,516
D
What is Delph's cost of goods sold for the year?
Cost of Goods Sold = Total Cost of Job D-70 + Total Cost of Job C-200
Cost of Goods Sold = 1,735,540+1,793,940 = $3,529,480
_________________________________________________________________
2)
Assume Delph uses departmental overhead rates based on machine-hours.
a. Compute the predetermined departmental overhead rates.
Calculation of Departmentwide Predetermined Overhead Rate:
Overhead Rate
= Total Fixed Manufacturing Expenses / Total Machine Hours + Variable Rate per Hour
For Molding:
740,000 / 31,000 + 5.90 = $29.77 per Machine Hour
For Fabrication:
=300,000 / 41,000 + 5.90 = $13.21 per Machine Hour
______________________________
b. Compute the total manufacturing costs assigned to Job D-70 & Job C-200
Job D-70
Job C-200
Direct Material Cost
705,000
550,000
Direct Labor Cost
400,000
410,000
Manufacturing Overhead
773,830
690,650
(29.77 x 22,000)+ (13.21 x 9,000)
(29.77 x 9,000) + (13.21 x 32,000)
Total Cost Assigned
1,878,830
1,650,650
c. If Delph establishes bid prices that are 140% of total manufacturing costs, what bid price would it have established for Job D-70 & Job C-200?
Job D-70
Job C-200
Total Manufacturing Cost
1,878,830
1,650,650
Add: Margin (40%)
751,532
660,260
Bid Price
2,630,362
2,310,910
d. What is Delph's cost of goods sold for the year?
Cost of Goods Sold = Total Cost of Job D-70 + Total Cost of Job C-200
Cost of Goods Sold
=1,878,830+1,650,650
= $3,529,480
Job D-70
Job C-200
Direct Material Cost
705,000
550,000
Direct Labor Cost
400,000
410,000
Manufacturing Overhead
630540
833940
(20.34*31000)
(20.34*41000)
Total Cost Assigned
1,735,540
1,793,940
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