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		30,000		40,000		70,000
Fixed manufacturing overhead costs	$	770,000	$	290,000	$	1,060,000
Variable manufacturing overhead cost per machine-hour	$	5.80	$	5.80

  

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	$	377,000	$	327,000	$	704,000
Direct labor cost	$	230,000	$	140,000	$	370,000
Machine-hours		23,000		7,000		30,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	260,000	$	260,000	$	520,000
Direct labor cost	$	110,000	$	260,000	$	370,000
Machine-hours		7,000		33,000		40,000

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.

Assume Delph uses a plantwide predetermined overhead rate based on machine-hours. Compute the plantwide predetermined overhead rate. (Round your answer to 2 decimal places.)

	Predetermined overhead rate per MH

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

Assume Delph uses a plantwide predetermined overhead rate based on machine-hours. Compute the total manufacturing cost assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places.)

	Total Manufacturing Cost Job D-70 Job C-200

c. If Delph establishes bid prices that are 140% of total manufacturing cost, what bid prices would it have established for Job D-70 and Job C-200?

Assume Delph uses a plantwide predetermined overhead rate based on machine-hours. If Delph establishes bid prices that are 140% of total manufacturing cost, what bid prices would it have established for Job D-70 and Job C-200? (Round your intermediate calculations to 2 decimal places.)

	Bid price Job D-70 Job C-200

d. What is Delph’s cost of goods sold for the year?

Assume Delph uses a plantwide predetermined overhead rate based on machine-hours. What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

	Cost of goods sold

Answer 1

a)
Molding Department
Estimated total manufacturing overhead cost = $770,000 + $5.80 x 30000 hrs	$944,000.00
÷ Estimated total machine-hours	30,000
Predetermined overhead rate	$31.47	Per MH
Fabrication Department
Estimated total manufacturing overhead cost = $290,000 + $5.80 x 40000 hrs	$522,000.00
÷ Estimated total machine-hours	40,000
Predetermined overhead rate	$13.05	Per MH
b)
Total manufacturing costs assigned to Jobs D-70 and C-200
	D-70	C-200
Direct Material	$704,000.00	$520,000.00
Direct Labour	$370,000.00	$370,000.00
Molding Department (23,000 MHs × $31.47 per MH; 7,000 MHs × $31.47 per MH)	$723,733.33	$220,266.67
Fabrication Department (7,000 MH × $13.05 per MH; 23,000 MH × $13.05 per MH)	$91,350.00	$430,650.00
Total manufacturing cost	$1,889,083.33	$1,540,916.67
c)
Bid prices for Jobs D-70 and C-200
Total manufacturing cost	$1,889,083.33	$1,540,916.67
× Markup percentage (140%)	140.00%	140.00%
Bid price	$2,644,716.67	$2,157,283.33
d)
Cost of goods sold is equal to the sum of the manufacturing costs assigned to both jobs.
Total manufacturing cost Job D-70	$1,889,083.33
Total manufacturing cost Job C-200	$1,540,916.67
Cost of goods sold	$3,430,000.00