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	$	760,000	$	210,000	$	970,000
Variable manufacturing overhead cost per machine-hour	$	5.30	$	5.30

  

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	$	379,000	$	321,000	$	700,000
Direct labor cost	$	240,000	$	160,000	$	400,000
Machine-hours		22,000		9,000		31,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	290,000	$	290,000	$	580,000
Direct labor cost	$	100,000	$	230,000	$	330,000
Machine-hours		9,000		32,000		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 130% 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

Answer 1(a):

Plant-wide predetermined overhead rate = (Estimated Fixed manufacturing overhead costs + Estimated Variable manufacturing overhead) / Estimated plant wide Machine-hours

= (970,000 + 31000 * 5.30 + 41000 * 5.30) / 72000

= $18.77222

Plant-wide predetermined overhead rate = $18.77222

Answer 1(b):

Manufacturing overhead allocated = Machine hour * $18.77222

Answer 1(c)

Answer 1(d)

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. Delph had no underapplied or overapplied manufacturing overhead during the year.