Question

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		23,000		33,000		56,000
Fixed manufacturing overhead costs	$	700,000	$	250,000	$	950,000
Variable manufacturing overhead cost per machine-hour	$	5.80	$	5.80

  

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	$	377,000	$	326,000	$	703,000
Direct labor cost	$	210,000	$	120,000	$	330,000
Machine-hours		16,000		7,000		23,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	290,000	$	290,000	$	580,000
Direct labor cost	$	170,000	$	260,000	$	430,000
Machine-hours		7,000		26,000		33,000

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

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.

c. If Delph establishes bid prices that are 140% of total manufacturing cost, what bid prices would it have established for Job D-70 and Job C-200?

d. What is Delph’s cost of goods sold for the year?

Answer 1

Solution 1(a)
Predetermined overhead rate		Working
	variable overhead rate	Given		$5.80
	fixed manufacturing overhead	(950000/56000)		$16.9643
	predetermined overhead rate			$22.7643
Solution 1(b)
	Total manufacturing cost assinged
	D-70			Working
	Direct materials cost		Given		$703,000
	direct labor cost		Given		$330,000.00
	overhead assigned		(23000*22.7643)		$523,578.90
	Total manufacturing cost			$1,556,578.90
	job c-200		Working
	Direct materials cost		Given		$580,000.00
	direct labor cost		Given		$430,000.00
	overhead assigned		(33000*22.7643)		$751,221.90
	Total manufacturing cost			$1,761,221.90
				Total manufacturing cost
	job D-70			$1,556,578.90
	Job C-200		$1,761,221.90
Solution 1(c)
	Bid price
				cost
	job D-70		1556578.90*140%	$2,179,210.46
	Job C-200	1761221.90*140%	$2,465,710.66
Solution 1(d)
	cost of goods sold	(1556578.90+1761221.90)	$3,317,800.80