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 34,000 44,000 78,000 Fixed manufacturing overhead costs $ 790,000 $ 220,000 $ 1,010,000 Variable manufacturing overhead cost per machine-hour $ 6.00 $ 6.00 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 $ 380,000 $ 322,000 $ 702,000 Direct labor cost $ 230,000 $ 130,000 $ 360,000 Machine-hours 24,000 10,000 34,000 Job C-200: Molding Fabrication Total Direct materials cost $ 260,000 $ 210,000 $ 470,000 Direct labor cost $ 110,000 $ 230,000 $ 340,000 Machine-hours 10,000 34,000 44,000 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 120% 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

• Requirement 2 [a]

Working		Molding Department:	Fabrication Department:
A	Total Fixed Overheads	$                  790,000	$                               220,000
B	Total machine hours	34,000	44,000
C = A/B	Fixed overhead rate	$                       23.24	$                                      5.00
D	Variable Overhead rate	$                         6.00	$                                      6.00
E = C+D	Predetermined Departmental Overhead rates = ANSWERS	$                       29.24	$                                    11.00

• Requiremnet 2[b]

	Job D 70	Job C 200
Molding Department:
Direct material cost	$                  380,000	$                               260,000
Direct Labor cost	$                  230,000	$                               110,000
Manufacturing Overhead	$                  701,760	$                               292,400
Fabrication Department:
Direct material cost	$                  322,000	$                               210,000
Direct Labor cost	$                  130,000	$                               230,000
Manufacturing Overhead	$                  110,000	$                               374,000
Total manufacturing cost assigned = ANSWERS	$               1,873,760	$                            1,476,400

• Requirement 2 [c]

		Job D 70	Job C 200
A	Total manufacturing cost assigned	$      1,873,760	$                  1,476,400
B = A x 120%	Bid Price	$      2,248,512	$                  1,771,680

• Requirement 2 [d]
  Cost of Goods Sold = 1873760 + 1476400
  = $ 3,350,160