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		28,000		38,000		66,000
Fixed manufacturing overhead costs	$	770,000	$	280,000	$	1,050,000
Variable manufacturing overhead cost per machine-hour	$	5.70	$	5.70

  

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	$	379,000	$	322,000	$	701,000
Direct labor cost	$	220,000	$	160,000	$	380,000
Machine-hours		18,000		10,000		28,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	250,000	$	270,000	$	520,000
Direct labor cost	$	160,000	$	230,000	$	390,000
Machine-hours		10,000		28,000		38,000

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

Exercise 2-15 Part 2

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