Exercise 2-15 (Algo) Plantwide and Departmental Predetermined Overhead Rates; Job Costs [LO2-1, LO2-2, LO2-3, LO2-4]

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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 56,000 machine-hours would be required for the periods estimated level of production. It also estimated $1,020,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 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	32,000	56,000
Fixed manufacturing overhead cost	$ 740,000	$ 280,000	$ 1,020,000
Variable manufacturing overhead cost per machine-hour	$ 3.00	$ 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	$ 240,000	$ 140,000	$ 380,000
Machine-hours	14,000	10,000	24,000

Job C-200	Molding	Fabrication	Total
Direct materials cost	$ 260,000	$ 200,000	$ 460,000
Direct labor cost	$ 120,000	$ 220,000	$ 340,000
Machine-hours	10,000	22,000	32,000

Delph had no underapplied or overapplied manufacturing overhead during the year.

Exercise 2-15 (Algo) Part 1

Required:

1. Assume Delph uses plantwide predetermined overhead rates 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 Delphs cost of goods sold for the year?