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		29,000		39,000		68,000
Fixed manufacturing overhead costs	$	740,000	$	270,000	$	1,010,000
Variable manufacturing overhead cost per machine-hour	$	5.50	$	5.50

  

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	$	373,000	$	323,000	$	696,000
Direct labor cost	$	220,000	$	150,000	$	370,000
Machine-hours		21,000		8,000		29,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	230,000	$	230,000	$	460,000
Direct labor cost	$	110,000	$	230,000	$	340,000
Machine-hours		8,000		31,000		39,000

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 molding and fabrication department 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 130% 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

a)	Departmental OH rates
	Particulars			Molding	Fabrication
	Fixed Manu. OH costs			$ 7,40,000.00	$ 2,70,000.00
	Machine hours			29000	39000
	Fixed Manu. OH rate			$            25.52	$              6.92
	Variable Manu. OH rate			$              5.50	$              5.50
	Departmental OH rate			$            31.02	$            12.42

b)	Job D-70
	Particulars			Molding	Workings	Fabrication	Workings	Total
	Direct materials cost			$   3,73,000.00		$ 3,23,000.00		$   6,96,000.00
	Direct labor cost			$   2,20,000.00		$ 1,50,000.00		$   3,70,000.00
	Manufacturing OH			$   6,51,362.07	(21000 x $ 31.02)	$    99,384.62	(8000 x $ 12.42)	$   7,50,746.68
	Total Manufacturing Cost			$ 12,44,362.07		$ 5,72,384.62		$ 18,16,746.68
	Job C-200
	Particulars			Molding	Workings	Fabrication	Workings	Total
	Direct materials cost			$   2,30,000.00		$ 2,30,000.00		$   4,60,000.00
	Direct labor cost			$   1,10,000.00		$ 2,30,000.00		$   3,40,000.00
	Manufacturing OH			$   2,48,137.93	(8000 x $ 31.02)	$ 3,85,115.38	(31000 x $ 12.42)	$   6,33,253.32
	Total Manufacturing Cost			$   5,88,137.93		$ 8,45,115.38		$ 14,33,253.32

c)
	Particulars		Job D-70	Job C-200
	Total Manufacturing Cost		$ 18,16,746.68	$ 14,33,253.32
Add:	Margin @ 130%		$ 23,61,770.69	$ 18,63,229.31
	Bid prices		$ 41,78,517.37	$ 32,96,482.63

d)

Cost of Goods sold

=

$ 32,50,000.00

There might be some differences because of decimals, let me know if you need any further assistance