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 $ 710,000 $ 230,000 $ 940,000 Variable manufacturing overhead cost per machine-hour $ 5.90 $ 5.90 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 $ 375,000 $ 321,000 $ 696,000 Direct labor cost $ 200,000 $ 140,000 $ 340,000 Machine-hours 25,000 9,000 34,000 Job C-200: Molding Fabrication Total Direct materials cost $ 290,000 $ 270,000 $ 560,000 Direct labor cost $ 160,000 $ 220,000 $ 380,000 Machine-hours 9,000 35,000 44,000 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 140% 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?

Calculate pre determined overhead rate:

Answer 1

A)pre determined overhead rate :

Total fixed overhead = 940000

Total variable overhead =[5.9*34000]+[5.9*44000] = 460200

Total estimated overhead = 940000+460200= 1400200

pre determined overhead rate = estimated overhead /estimated machine hours

                    = 1400200/78000

                       = $ 17.95 per MH

2)

	Job D-70	Job C-200
Direct material	696000	560000
Direct labor	340000	380000
overhead	34000*17.95= 610300	44000*17.95=789800
Total manufacturing cost	1646300	1729800

c)

	JobD-70	Job C-200
Bid price	1646300*140%	1729800*140%
	2304820	2421720

d)cost of goods sold =cost of Job D-70 +Cos of job C-200

      =1646300+1729800

     = 3376100