EXERCISE 2–15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs LO2–1, LO2–2, LO2–3, LO2–4 Delph Company uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 50,000 machine-hours would be required for the period’s estimated level of production. It also estimated $910,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.80 per machine-hour.

Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine-hours. The company gathered the following information to enable calculating departmental overhead rates:

Molding Fabrication Total . . . . 20,000 30,000 50,000 Fixed manufacturing overhead cost Variable manufacturing overhead cost per machine-hour Direct materials cost Direct labor cost Machine-hours Job C-200 Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $700,000 $210,000 $910,000 $3.00 $1.00 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 $375,000 $325,000 $700,000 . . . $200,000 $160,000 $360,000 . . . . 14,000 6,000 20,000 Molding Fabrication Total $300,000 $250,000 $550,000 . . . $175,000 $225,000 $400,000 . . . . 6,000 24,000 30,000 Delph had no underapplied or overapplied manufacturing overhead during the year.
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 150% 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?

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 150% 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?
3. What managerial insights are revealed by the computations that you performed in this problem? (Hint: Do the cost of goods sold amounts that you computed in requirements 1 and 2 differ from one another? Do the bid prices that you computed in requirements 1 and 2 differ from one another? Why?)