Math Problem Statement
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 55,000 machine-hours would be required for the period’s estimated level of production. It also estimated $1,020,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $5.00 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 21,000 34,000 55,000 Fixed manufacturing overhead cost $ 780,000 $ 240,000 $ 1,020,000 Variable manufacturing overhead cost per machine-hour $ 5.00 $ 2.00 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 $ 220,000 $ 120,000 $ 340,000 Machine-hours 17,000 4,000 21,000 Job C-200 Molding Fabrication Total Direct materials cost $ 280,000 $ 260,000 $ 540,000 Direct labor cost $ 120,000 $ 260,000 $ 380,000 Machine-hours 4,000 30,000 34,000 Delph had no underapplied or overapplied manufacturing overhead during the year.
Exercise 2-17 (Algo) Part 1 Required:
- Assume Delph uses plantwide predetermined overhead rates based on machine-hours.
Compute the plantwide predetermined overhead rate.
Solution
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Math Problem Analysis
Mathematical Concepts
Cost Accounting
Job-Order Costing
Overhead Allocation
Formulas
Predetermined Overhead Rate = (Total Estimated Manufacturing Overhead) / (Total Estimated Machine-Hours)
Total Manufacturing Overhead = Fixed Overhead + (Variable Overhead Rate × Total Machine-Hours)
Theorems
-
Suitable Grade Level
College Level
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