Question
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
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 53,000 machine-hours would be required for the periods estimated level of production. It also estimated $1,040,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per machine-hour.
Because Delph has two manufacturing departmentsMolding and Fabricationit 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 | |
|---|---|---|---|
| Machine-hours | 20,000 | 33,000 | 53,000 |
| Fixed manufacturing overhead cost | $ 760,000 | $ 280,000 | $ 1,040,000 |
| Variable manufacturing overhead cost per machine-hour | $ 4.00 | $ 1.50 |
During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobsJob 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 | $ 370,000 | $ 320,000 | $ 690,000 |
| Direct labor cost | $ 220,000 | $ 120,000 | $ 340,000 |
| Machine-hours | 14,000 | 6,000 | 20,000 |
| Job C-200 | Molding | Fabrication | Total |
|---|---|---|---|
| Direct materials cost | $ 260,000 | $ 220,000 | $ 480,000 |
| Direct labor cost | $ 160,000 | $ 240,000 | $ 400,000 |
| Machine-hours | 6,000 | 27,000 | 33,000 |
Delph had no underapplied or overapplied manufacturing overhead during the year.
Required: 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 Delphs cost of goods sold for the year?
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Cost of Goods Sold-
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Audit Risk Management Driving Audit Value The Best Practice Strategy Guide For Minimising The Audit Risks And Achieving The Internal Audit Strategies And Objectives Volume 2
Authors: Hans Beumer
1st Edition
3906861155, 978-3906861159
