The following information is available for 20X8 for Latta Company: Ending Work i
ID: 2333264 • Letter: T
Question
The following information is available for 20X8 for Latta Company:
Ending Work in Process: $40,000 (including applied overhead of $19,500)
Ending Finished Goods: $120,000 (including applied overhead of $58,500)
Cost of Goods Sold for the year: $640,000 (including applied overhead of $312,000 from this year)
For example, of the $40,000 ending balance in work in process, $19,500 was overhead that had been applied during the year.
At year end, the company had an over-applied overhead balance of $200. This amount IS considered significant.
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
Machine-hours
20,000
30,000
50,000
Fixed manufacturing overhead costs
$700,000
$210,000
$910,000
Variable manufacturing overhead per machine hour
$3.00
$3.00
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
$375,000
$325,000
$700,000
Direct labor cost
$200,000
$160,000
$360,000
Machine-hours
14,000
6,000
20,000
Job D-200
Molding
Fabrication
Total
Direct materials cost
$300,000
$250,000
$550,000
Direct labor cost
$175,000
$225,000
$400,000
Machine-hours
6,000
24,000
30,000
Delph had no overapplied or underapplied manufacturing overhead during the year.
Required:
1. Assume Delph uses a departmental overhead rate based on machine - hours. Compute the predetermined overhead rate for Molding department.
Answer: 35 did not work when I tried it
Molding
Fabrication
Total
Machine-hours
20,000
30,000
50,000
Fixed manufacturing overhead costs
$700,000
$210,000
$910,000
Variable manufacturing overhead per machine hour
$3.00
$3.00
Explanation / Answer
The answer is " $38 per machine hour "
The total operating cost of molding department
= (3 x 20,000) + 700,000 = $760,000
The predetermined overhead rate for Molding department
= 760,000 / 20,000 = $38 per machine hour
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