Delph Company uses a job-order costing system with a plantwide predetermined overhead rate based on machine hours. At the beginning
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 period’s estimated level of production. It also estimated $980,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per machine-hour.
Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine hours. The company gathered the following information to enable calculating departmental overhead rates:
|Fixed manufacturing overhead cost||$ 780,000||$ 200,000||$ 980,000|
|Variable manufacturing overhead cost per machine-hour||$ 4.00||$ 1.50|
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:
|Direct materials cost||$ 370,000||$ 320,000||$ 690,000|
|Direct labor cost||$ 220,000||$ 140,000||$ 360,000|
|Direct materials cost||$ 280,000||$ 260,000||$ 540,000|
|Direct labor cost||$ 180,000||$ 300,000||$ 480,000|
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 Delph’s cost of goods sold for the year?