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 53,000 machine-hours would be required for the periods estimated level of production. It also estimated $980,000 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	22,000	31,000	53,000
Fixed manufacturing overhead cost	$ 760,000	$ 220,000	$ 980,000
Variable manufacturing overhead cost per machine-hour	$ 5.00	$ 1.00

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	$ 240,000	$ 160,000	$ 400,000
Machine-hours	14,000	8,000	22,000

Job C-200	Molding	Fabrication	Total
Direct materials cost	$ 260,000	$ 260,000	$ 520,000
Direct labor cost	$ 120,000	$ 260,000	$ 380,000
Machine-hours	8,000	23,000	31,000

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

Exercise 3-17 (Algo) Part 2

Required:

1. Assume Delph uses departmental predetermined overhead rates based on machine-hours.
   1. Compute the departmental predetermined overhead rates.
   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 cost, 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?