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 31,000 41,000 72,000 Fixed manufacturing overhead costs $ 710,000 $ 230,000 $ 940,000 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 $ 377,000 $ 325,000 $ 702,000 Direct labor cost $ 200,000 $ 160,000 $ 360,000 Machine-hours 21,000 10,000 31,000 Job C-200: Molding Fabrication Total Direct materials cost $ 200,000 $ 290,000 $ 490,000 Direct labor cost $ 170,000 $ 250,000 $ 420,000 Machine-hours 10,000 31,000 41,000 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 120% 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

a. Compute the plantwide predetermined overhead rate.

Plantwide predetermined overhead rate= Total estimated overhead costs/Total estimated machine hours

= {($6.00*72000)+$940000}/72000

= $19.06 per machine hour

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

	Job D-70	Job C-200
Direct materials cost	$702000	$490000
Direct labor cost	360000	420000
Manufacturing overhead applied	(31000*$19.06)= 590860	(41000*$19.06)= 781460
Total manufacturing costs	$1652860	$1691460

c. If Delph establishes bid prices that are 120% of total manufacturing cost, what bid prices would it have established for Job D-70 and Job C-200?

Bid price= Total manufacturing costs*120%

Job D-70= $*120%= $1983432

Job C-200= $1691460*120%= $2029752

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

Cost of goods sold= Total manufacturing cost of Job D-70+Total manufacturing cost of Job C-200

= $1652860+1691460= $3344320

NOTE:- For any problem regarding the answer please ask in the comment section.