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		24,000		34,000		58,000
Fixed manufacturing overhead costs	$	780,000	$	240,000	$	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	$	374,000	$	321,000	$	695,000
Direct labor cost	$	230,000	$	170,000	$	400,000
Machine-hours		16,000		8,000		24,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	300,000	$	210,000	$	510,000
Direct labor cost	$	150,000	$	220,000	$	370,000
Machine-hours		8,000		26,000		34,000

Delph had no underapplied or overapplied manufacturing overhead during the year.

Questions:

1.Compute the departmental predetermined overhead rates for the molding department, and then the fabrication department. (Round the final answers to 2 decimal places.)

2.Compute the total manufacturing cost assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places.

3.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? (Round your intermediate calculations to 2

decimal places.)

4.What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Answer 1

Solution 1:

Predetermined overhead rate = Variable overhead per machine hour + (Estimated fixed overhead / Estimated machine hours)

Molding = $6 + ($780,000/24000) = $38.50 per machine hour

Fabrication = $6 + ($240,000 / 34000) = $13.06 per machine hour

Solution 2:

Compuatation of manufacturing cost assigned to Job - Delph
Particulars	Job D70	Job C200
Direct Material	$695,000.00	$510,000.00
Direct Labor	$400,000.00	$370,000.00
Manufacturing overhead - Molding D 70 - 16000*$38.50 C200 - 8000*$38.50	$616,000.00	$308,000.00
Manufacturing overhead - Fabrication D 70 - 8000*$13.06 C200 - 26000*$13.06	$104,480.00	$339,560.00
Total Manufacturing cost	$1,815,480.00	$1,527,560.00

Solution 3:

Compuatation of Bid Price
Particulars	Job D70	Job C200
Manufacturing Cost	$1,815,480.00	$1,527,560.00
Markup (30%)	$544,644.00	$458,268.00
Bid Price of Job	$2,360,124.00	$1,985,828.00

Solution 4:

Delph cost of goods sold for the year = Cost of Job D70 + Cost of Job C200

= $1,815,480 + $1,527,560

= $3,343,040