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.

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

a. Compute the departmental predetermined overhead rates.

Compute the departmental predetermined overhead rates. (Round the final answers to 2 decimal places.)

	Pre determined overhead rates Molding Department per MH Fabrication Department per MH

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

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 costs, what bid prices would it have established for Job D-70 and Job C-200?

If Delph establishes bid prices that are 140% of total manufacturing costs, 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?

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

Solution 2a:

Compuation of predetermined departmental overhead rates - Delph Company
Particulars	Molding	Fabrication
Estimated Variable overhead	$174,000.00	$232,000.00
Estimated fixed overhead	$770,000.00	$290,000.00
Estimated total manufacturing overhead	$944,000.00	$522,000.00
Estimated machine hours	30000	40000
Predetermined overhead rate	$31.47	$13.05

Solution 2b:

Compuatation of manufacturing cost assigned to Job - Delph
Particulars	Job D70	Job C200
Direct Material	$704,000.00	$520,000.00
Direct Labor	$370,000.00	$370,000.00
Manufacturing overhead - Molding D 70 - 23000*$31.47 C200 - 7000*$31.47	$723,810.00	$220,290.00
Manufacturing overhead - Fabrication D 70 - 7000*$13.05 C200 - 33000*$13.05	$91,350.00	$430,650.00
Total Manufacturing cost	$1,889,160.00	$1,540,940.00

Solution 2c:

Compuatation of Bid Price
Particulars	Job D70	Job C200
Manufacturing Cost	$1,889,160.00	$1,540,940.00
Markup (40%)	$755,664.00	$616,376.00
Bid Price of Job	$2,644,824.00	$2,157,316.00

Solution 2d:

Delph’s cost of goods sold for the year = Manufacturing cost of Job D70 + Manufacturing cost of C200

= $1,889,160 + $1,540,940 = $3,430,100