Exercise 2-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs

Question

Exercise 2-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs [LO2-1, LO2-2, LO2-3, LO2-4]

[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:

  

  

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:

  

  

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

Exercise 2-15 Part 1

Required:

1. Assume Delph uses a plantwide predetermined overhead rate based on machine-hours.

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

Molding Fabrication Total Machine-hours 31,000 41,000 72,000 Fixed manufacturing overhead costs $ 740,000 $ 210,000 $ 950,000 Variable manufacturing overhead cost per machine-hour $ 5.50 $ 5.50

Explanation / Answer

a)

b)

Calculation of Plantwide Predetermined Overhead Rate Total fixed cost $             950,000.00 Variable cost(72,000*5.5) $             396,000.00 Total Manufacuring cost(A) $         1,346,000.00 Total Machine hours(B)                   72,000.00 Predetermined Overhead Rate (C )=(A)/(B) $                     18.694

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