Question

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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		21,000		31,000		52,000
Fixed manufacturing overhead costs	$	720,000	$	300,000	$	1,020,000
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	$	322,000	$	697,000
Direct labor cost	$	210,000	$	160,000	$	370,000
Machine-hours		16,000		5,000		21,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	260,000	$	200,000	$	460,000
Direct labor cost	$	130,000	$	280,000	$	410,000
Machine-hours		5,000		26,000		31,000

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

a)	Compute the plantwide predetermined overhead rate.
	i	Fixed manufacturing overhead costs	1,020,000
	ii	Machine-hours	52,000
	iii=i/ii	Fixed Overhead rate	19.62
	iv	Variable overhead rate =	6.00
	v=iv+iii	Total manufacturing overhead rate =	25.62
b)	Compute the total manufacturing cost assigned to Job D-70 and Job C-200.
		Job D -70
		Direct material	697,000.00
		Direct labor	370,000.00
		overhead =21000*25.62	537,923.08
		Total manufacturing cost	1,604,923.08
		Job C-200.
		Direct material	460,000.00
		Direct labor	410,000.00
		overhead =31000*25.62	794,076.92
		Total manufacturing cost	1,664,076.92
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
			Job D -70	Job C-200.
		Total cost	1,604,923.08	1,664,076.92
		Bid price = 130% of total cost	2,086,400.00	2,163,300.00
d)	What is Delph’s cost of goods sold for the year
		Cost of goods sold = Total manufaturing cost of Job D-70 + Job C -200
			=1604923.08+1664076.92
			3269000