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 55,000 machine-hours would be required for the periods estimated level of production. It also estimated $940,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $5.00 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 | 24,000 | 31,000 | 55,000 |
Fixed manufacturing overhead cost | $ 720,000 | $ 220,000 | $ 940,000 |
Variable manufacturing overhead cost per machine-hour | $ 5.00 | $ 2.00 |
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 | 10,000 | 24,000 |
Job C-200 | Molding | Fabrication | Total |
---|---|---|---|
Direct materials cost | $ 260,000 | $ 300,000 | $ 560,000 |
Direct labor cost | $ 160,000 | $ 240,000 | $ 400,000 |
Machine-hours | 10,000 | 21,000 | 31,000 |
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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