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. 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

Solution 2a:
Computation of Departmental overhead rate - Delph
Particulars	Molding	Fabrication
Fixed overhead	$710,000.00	$230,000.00
Variable overhead	$186,000.00	$246,000.00
Total overhead	$896,000.00	$476,000.00
Machine hours	$31,000.00	$41,000.00
Overhead rate per machine hour	$28.90	$11.61
Solution 2b:
Compuatation of manufacturing cost assigned to Job - Delph
Particulars	Job D70	Job C200
Direct Material	$702,000	$490,000
Direct Labor	$360,000	$420,000
Manufacturing overhead - Molding D 70 - 21000*$28.90 C200 - 10000*$28.90	$606,968	$289,032
Manufacturing overhead - Fabrication D 70 - 10000*$11.61 C200 - 31000*$11.61	$116,098	$359,902
Total Manufacturing cost	$1,785,065	$1,558,935
Solution 2c:
Compuatation of Bid Price
Particulars	Job D70	Job C200
Manufacturing Cost	$1,785,065	$1,558,935
Markup (20%)	$357,013	$311,787
Bid Price of Job	$2,142,078	$1,870,722
Solution 2d:
Delph’s cost of goods sold for the year = $1,785,065 + $1,558,935 = $3,344,000