Question

In: Accounting

Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company...

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.

2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.

a. Compute the departmental predetermined overhead rates.

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 costs, 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?

Solutions

Expert Solution

(a) Departmental overhead rate :

Molding overhead rate = Fixed + Variable

($700000/23000) + $5.80 = $36.23 per Hour

Fabrication overhead rate =

($250000/33000) + $5.80 = $13.38 per hour

(b) Compute the total manufacturing cost assigned to Job D-70 and Job C-200.


Job D-70

Job C-200

Direct material

$703000

$580000

Direct labor

$330000

$430000

Molding overhead

(16000 * $36.23)

=$579680

(7000 * $36.23)

=$253610

Fabrication overhead

(7000 * $13.38)

=$93660

(26000 * $13.38)

=$347880

Total manufacturing cost

$1706340

$1611490

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

Job D-70   ($1706340 * 140%)

$2388876

Job C-200 ($1611490 * 140%)

$2256086

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

Manufacturing cost of Job D-70 + Job C-200

$1706340 + $1611490 = $3317830


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