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.

2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.

a. Compute the departmental 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

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Part 2a
Departmental Predetermined Overhead Rates:
		Molding	Fabrication
Estimated total Machine Hours	A	21,000	31,000
Estimated Total Fixed Manufacturing Overheads	B	$     720,000	$   300,000
Predetermined Overhead Rate-Fixed	B/A	$         34.29	$          9.68
Variable Overhead Rate		$            6.00	$          6.00
Total Predetermined Overhead Rate		$         40.29	$        15.68
Part 2b
	Job D70		Job C200
Direct Material		$     697,000		$   460,000
Direct Labor		$     370,000		$   410,000
Variable Manufacturing Overheads:
Molding 16000*6 & 5000*6	$                 96,000		$      30,000
Fabrication 5000*6 *26000*6	$                 30,000	$     126,000	$   156,000	$   186,000
Fixed Manufacturing Overheads:
Molding 16000*34.29 & 5000*34.29	$               548,571		$   171,429
Fabrication 5000*9.68 & 26000*9.68	$                 48,387	$     596,959	$   251,613	$   423,041
Total Cost for Job D70/C200		$ 1,789,959		$1,479,041
Part 2c
		Job D70	Job C200
Total Cost for Job D70		$ 1,789,959	$1,479,041
Bid Price 130% of Cost		$ 2,326,946	$1,922,754
Part 2d
		Job D70	Job C200	Total
Cost of Goods Sold for D70		$ 1,789,959	$1,479,041	$3,269,000