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		25,000		35,000		60,000
Fixed manufacturing overhead costs	$	760,000	$	250,000	$	1,010,000
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	$	375,000	$	324,000	$	699,000
Direct labor cost	$	230,000	$	120,000	$	350,000
Machine-hours		19,000		6,000		25,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	220,000	$	300,000	$	520,000
Direct labor cost	$	140,000	$	300,000	$	440,000
Machine-hours		6,000		29,000		35,000

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 150% 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

		Molding		Fabrication			Total
	Machine-hours		25,000		35,000		60,000
	Fixed manufacturing overhead costs	$	760,000	$	250,000	$	1,010,000
	Variable manufacturing overhead cost per machine-hour	$	6	$	6
	Compute the plantwide predetermined overhead rate
a	The plantwide predetermined rate is
	1010000/60000	16.83
b	Total manufacturing cost assigned to Job D-70 and Job C-200
	Job D-70	19000*(1010000/60000)	319833.3
		6000*(1010000/60000)	101000
	Total Manufacturing expenses		420833
	Job C-200	6000*(1010000/60000)	101000
		29000*(1010000/60000)	488166.7
	Total Manufacturing expenses		589167
c)	Bid prices for Job D-70
	150% of 420833	631250
	Bid prices for Job C- 200
	150% of 589167	883751
d)	Cost of Goods Sold
	Direct material costs	699000+520000	1219000
	Direct Labor costs	350000+440000	790000
	Variable Manufacturing overhead	60000*6	360000
	Fixed manufacturing overhead costs	1010000	1010000
	Cost of Goods sold		3379000