Delph Company uses job-order costing with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 54,000 machine-hours would be required for the period’s estimated level of production. It also estimated $1,000,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per machine-hour. Because Delph has two manufacturing departments—Molding and Fabrication—it 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 23,000 31,000 54,000 Fixed manufacturing overhead cost $ 760,000 $ 240,000 $ 1,000,000 Variable manufacturing overhead cost per machine-hour $ 4.00 $ 1.00 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 Molding Fabrication Total Direct materials cost $ 370,000 $ 320,000 $ 690,000 Direct labor cost $ 240,000 $ 160,000 $ 400,000 Machine-hours 17,000 6,000 23,000 Job C-200 Molding Fabrication Total Direct materials cost $ 200,000 $ 300,000 $ 500,000 Direct labor cost $ 100,000 $ 260,000 $ 360,000 Machine-hours 6,000 25,000 31,000 Delph had no underapplied or overapplied manufacturing overhead during the year. Required: 2. Assume Delph uses departmental predetermined overhead rates based on machine-hours. Compute the departmental predetermined overhead rates. Compute the total manufacturing cost assigned to Job D-70 and Job C-200. 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? What is Delph’s cost of goods sold for the year?

Delph Company uses job-order costing with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 54,000 machine-hours would be required for the period’s estimated level of production. It also estimated $1,000,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per machine-hour. Because Delph has two manufacturing departments—Molding and Fabrication—it 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 23,000 31,000 54,000 Fixed manufacturing overhead cost $ 760,000 $ 240,000 $ 1,000,000 Variable manufacturing overhead cost per machine-hour $ 4.00 $ 1.00 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 Molding Fabrication Total Direct materials cost $ 370,000 $ 320,000 $ 690,000 Direct labor cost $ 240,000 $ 160,000 $ 400,000 Machine-hours 17,000 6,000 23,000 Job C-200 Molding Fabrication Total Direct materials cost $ 200,000 $ 300,000 $ 500,000 Direct labor cost $ 100,000 $ 260,000 $ 360,000 Machine-hours 6,000 25,000 31,000 Delph had no underapplied or overapplied manufacturing overhead during the year. Required: 2. Assume Delph uses departmental predetermined overhead rates based on machine-hours. Compute the departmental predetermined overhead rates. Compute the total manufacturing cost assigned to Job D-70 and Job C-200. 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? What is Delph’s cost of goods sold for the year?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 6E: Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a...

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	Molding	Fabrication	Total
Machine-hours	23,000	31,000	54,000
Fixed manufacturing overhead cost	$ 760,000	$ 240,000	$ 1,000,000
Variable manufacturing overhead cost per machine-hour	$ 4.00	$ 1.00

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	17,000	6,000	23,000

Job C-200	Molding	Fabrication	Total
Direct materials cost	$ 200,000	$ 300,000	$ 500,000
Direct labor cost	$ 100,000	$ 260,000	$ 360,000
Machine-hours	6,000	25,000	31,000

Required:

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

Compute the departmental predetermined overhead rates.
Compute the total manufacturing cost assigned to Job D-70 and Job C-200.
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?
What is Delph’s cost of goods sold for the year?

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