Exercise 317 Plantwide and Departmental Overhead Rates Job C

Exercise 3-17 Plantwide and Departmental Overhead Rates, Job Costs [LO3-1, LO3-2, LO3-3] [The following information applies to the questions displayed below Delph Company uses a job-order costing system and has two manufacturing departments-Molding and Fabrication. The company provided the following estimates at the beginning of the year Molding Fabrication Total 72,000 Machine-hours Fixed manufacturing overhead costs Variable manufacturing overhead per machine-hour$5.90 31,000 41,000 $ 740,000 s 300,000 $ 1,040,0 $5.90 During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs-Job D-70 and Job C-200. It provided the following information related to those two jobs: Job D-70: Direct materials cost 376,000 329,000 $705,000 Direct labor cost Machine-hours Molding Fabrication Total 230,000 $170,000 $400,000 22,000 9,000 31,000 Job C-200: Direct materials cost 280,000 270,000 $550,000 Direct labor cost Machine-hours Molding Fabrication Total 140,000 $270,000 $ 410,000 9,000 32,000 41,000 Delph had no overapplied or underapplied manufacturing overhead during the year. References

Solution

Answer:

1)

a. Compute the predetermined plantwide overhead rate.

Calculation of Plantwide Predetermined Overhead Rate:

Overhead Rate

= Total Fixed Manufacturing Expenses / Total Machine Hours + Variable Rate per Hour

Overhead Rate

= 1,040,000 / 72,000 + 5.9

= $20.34 per Machine Hour

b.

Compute the total manufacturing costs assigned to Job D-70 & Job C-200.

Job D-70

Job C-200

Direct Material Cost

705,000

550,000

Direct Labor Cost

400,000

410,000

Manufacturing Overhead

630540

833940

(20.34*31000)

(20.34*41000)

Total Cost Assigned

1,735,540

1,793,940

c.

If delph establishes bid prices that are 150% of the total manufacturing costs, what price would it have established for Job D-70 & Job C-200?

Job D-70

Job C-200

Total Manufacturing Cost

1,735,540

1,793,940

Add: Margin (40%)

694,216

717,576

Bid Price

2,429,756

2,511,516

D

What is Delph\'s cost of goods sold for the year?

Cost of Goods Sold = Total Cost of Job D-70 + Total Cost of Job C-200

Cost of Goods Sold = 1,735,540+1,793,940 = $3,529,480

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2)

Assume Delph uses departmental overhead rates based on machine-hours.

a. Compute the predetermined departmental overhead rates.

Calculation of Departmentwide Predetermined Overhead Rate:

Overhead Rate

= Total Fixed Manufacturing Expenses / Total Machine Hours + Variable Rate per Hour

For Molding:

740,000 / 31,000 + 5.90 = $29.77 per Machine Hour

For Fabrication:

=300,000 / 41,000 + 5.90 = $13.21 per Machine Hour

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b. Compute the total manufacturing costs assigned to Job D-70 & Job C-200

Job D-70

Job C-200

Direct Material Cost

705,000

550,000

Direct Labor Cost

400,000

410,000

Manufacturing Overhead

773,830

690,650

(29.77 x 22,000)+ (13.21 x 9,000)

(29.77 x 9,000) + (13.21 x 32,000)

Total Cost Assigned

1,878,830

1,650,650

c. If Delph establishes bid prices that are 140% of total manufacturing costs, what bid price would it have established for Job D-70 & Job C-200?

Job D-70

Job C-200

Total Manufacturing Cost

1,878,830

1,650,650

Add: Margin (40%)

751,532

660,260

Bid Price

2,630,362

2,310,910

d. What is Delph\'s cost of goods sold for the year?

Cost of Goods Sold = Total Cost of Job D-70 + Total Cost of Job C-200

Cost of Goods Sold

=1,878,830+1,650,650

= $3,529,480

	Job D-70	Job C-200
Direct Material Cost	705,000	550,000
Direct Labor Cost	400,000	410,000
Manufacturing Overhead	630540	833940
	(20.34*31000)	(20.34*41000)
Total Cost Assigned	1,735,540	1,793,940