Exercise 2-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs
ID: 2330774 • Letter: E
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 $ 5.50Explanation / Answer
1. Plantwide pre-determined overhead rate based on machine-hours
a. Total variable manufacturing overhead = (31,000 x 5.50) + (41,000 x 5.50) = 396,000
Total manufacturing overhead = 396,000 + 950,000 = $1,346,000
Plantwide pre-determined overhead rate = 1,346,000 / 72,000 =18.69 per machine hour
b. Total manufacturing cost assigned to Job D-70 = 18.69 x 31,000 = $579,390
Total manufacturing cost assigned to Job C-200 = 18.69 x 41,000 = $766,290
(Differences may arise due to rounding off)
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