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 57,000 machine-hours would be required for the periods estimated level of production. It also estimated $1,000,000 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:

MoldingFabricationTotalMachine-hours22,00035,00057,000Fixed manufacturing overhead cost$ 780,000$ 220,000$ 1,000,000Variable manufacturing overhead cost per machine-hour$ 3.00$ 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-70MoldingFabricationTotalDirect materials cost$ 370,000$ 320,000$ 690,000Direct labor cost$ 200,000$ 120,000$ 320,000Machine-hours14,0008,00022,000

Job C-200MoldingFabricationTotalDirect materials cost$ 260,000$ 260,000$ 520,000Direct labor cost$ 160,000$ 280,000$ 440,000Machine-hours8,00027,00035,000

Delph had no underapplied or overapplied manufacturing overhead during 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 Delphs cost of goods sold for the year?