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Exercise 3-17 (Algo) Plantwide and Departmental Predetermined Overhead Rates; Job Costs [LO3-1, LO3-2, LO3-3, LO3-4] Skip to question [The following information applies to the questions

Exercise 3-17 (Algo) Plantwide and Departmental Predetermined Overhead Rates; Job Costs [LO3-1, LO3-2, LO3-3, LO3-4]

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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 $1,040,000 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 22,000 34,000 56,000
Fixed manufacturing overhead cost $ 780,000 $ 260,000 $ 1,040,000
Variable 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-70 Molding Fabrication Total
Direct materials cost $ 370,000 $ 320,000 $ 690,000
Direct labor cost $ 200,000 $ 140,000 $ 340,000
Machine-hours 14,000 8,000 22,000
Job C-200 Molding Fabrication Total
Direct materials cost $ 220,000 $ 280,000 $ 500,000
Direct labor cost $ 160,000 $ 280,000 $ 440,000
Machine-hours 8,000 26,000 34,000

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

Exercise 3-17 (Algo) Part 1

Required:

  1. Assume Delph uses plantwide predetermined overhead rates based on machine-hours.
    1. Compute the plantwide predetermined overhead rate.
    2. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.
    3. 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?
    4. What is Delphs cost of goods sold for the year?

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