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 58,000 machine-hours would be required for the period’s estimated level of production. It also estimated $1,040,000 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 25,000 33,000 58,000 Fixed manufacturing overhead cost $ 740,000 $ 300,000 $ 1,040,000 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 $ 180,000 $ 400,000 Machine-hours 14,000 11,000 25,000 Job C-200 Molding Fabrication Total Direct materials cost $ 220,000 $ 260,000 $ 480,000 Direct labor cost $ 120,000 $ 280,000 $ 400,000 Machine-hours 11,000 22,000 33,000 Delph had no underapplied or overapplied manufacturing overhead during the year.
Required: 2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.
Compute the departmental predetermined overhead rates.
Solution
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Math Problem Analysis
Mathematical Concepts
Cost Accounting
Job-Order Costing
Predetermined Overhead Rates
Variable and Fixed Manufacturing Overhead Costs
Formulas
Predetermined Overhead Rate formula
Theorems
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Suitable Grade Level
Advanced Accounting
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