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		25,000		33,000		58,000
Fixed manufacturing overhead cost	$	780,000	$	260,000	$	1,040,000
Variable manufacturing overhead cost per machine-hour	$	3.00	$	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	$	160,000	$	380,000
Machine-hours		16,000		9,000		25,000

  

Job C-200	Molding		Fabrication		Total
Direct materials cost	$	200,000	$	260,000	$	460,000
Direct labor cost	$	100,000	$	220,000	$	320,000
Machine-hours		9,000		24,000		33,000

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

2. Assume Delph chooses to combine its departmental rates from requirement 1 into 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 150% 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?

Answer 1

2.)
a.)	Plantwide predetermined overhead rate	$ 22.93103	={(1040000/58000)+3+2 }

b.)		Job D-70	Job C-200
	Direct materials Costs	690,000	460,000
	Add: Direct labor Cost	280,000	320,000
	Add: Applied overhead ( 22.93103 x machine hours)	*573,276	**756,724
	Total Manufacturing cost assigned	1,543,276	1,536,724
	* 573,276 ( 25,000 x 22.93103)
	** 756,724 ( 33,000 x 22.93103 )
c.)		Bid Price $
	Job D-70	2,314,914	(1543276*150%)
	Job C-200	2,305,086	(1536724*150%)
d.)	Cost of goods sold for the year	$ 3,080,000	(1,543,276 + 1,536,724 )