Chapter 2 If Delph establishes bid prices that are l 50% of total manufacturing cost, wha, bid prices would it have established for Job D:70 and Job C-200? c. d. What is Delph's cost of goods sold for the year? 2. Assame Delph uses departmental predetermined overhead rates based on machine-hours. a Compute the departmental predetermined overhead rates b. Compute the total manafacturing cost assigned to Job D-70 and Job C-200. C. If Delph establishes bid prices that are l 50% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200 What is Delph's cost of goods sold for the year? d. 3. What managerial insights are revealed by the computations that you performed in this prob- lem? (Hind: Do the cost of goods sold amounts that you computed in requirements I and 2 differ from one another? Do the bid prices that you computed in requirements 1 and 2 diffier from one another? Why) a connect 1s PROBLEM 2-16 Plantwide Predetermined Overhead Rates Pricing LO2-1 LO2-2. Lo2-3 Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates Direct labor-hours required to support estimated production Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 140,000 70.000 $784,000 $2.00 $4.00 During the year, Job 350 was started and completed. The following information is available with respect to this job: Direct labor cost Direct labor-hours. .$175 $225 15 Required I. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: a. Compute the plantwide predetermined overhead rate b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of 20% of its total manufactunng cost-what selling price would it establish for Job 550? 2 Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours, Under this approach: a Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of 200% of its total manufactunng cost. what selling price would it establish for Job 550? 3. Assume that Landen's controller is right about machine-hours being a more accuraie overhead cost allocation base than direct labor-bours. If the company continues to use direct labor-hours as its only overhead cost allocation base what implications does this have for pricing jobs sach as Job 550 PROBLEM 2-17 Plantwide and Departmental Predetermined Overhead Rates; Overhead Application LO2-1, LO2-2 Wilmington Company has two manufacturing departments-Assembly and Fabrication. Ii con- siders all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown
