Question

The following information applies to the questions displayed below.] 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 27,000 37,000 64,000 Fixed manufacturing overhead costs $ 780,000 $ 240,000 $ 1,020,000 Variable manufacturing overhead cost per machine-hour $ 5.20 $ 5.20 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 $ 373,000 $ 329,000 $ 702,000 Direct labor cost $ 230,000 $ 150,000 $ 380,000 Machine-hours 21,000 6,000 27,000 Job C-200: Molding Fabrication Total Direct materials cost $ 280,000 $ 290,000 $ 570,000 Direct labor cost $ 120,000 $ 260,000 $ 380,000 Machine-hours 6,000 31,000 37,000 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 150% 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

2-a. Departmental predetermined overhead rates:

	Molding	Fabrication
Fixed manufacturing overheads $	780000	240000
Machine hours	27000	37000
Predetermined overhead rate $/machine-hour	28.89	6.49

Note: The departmental predetermined overhead rates have been rounded-off to 2 decimal places in absence of information regarding the same in the question.

2-b.

	Job D-70	Job C-200
Direct materials	702000	570000
Direct labor	380000	380000
Variable manufacturing overheads	140400	192400
	(27000 x $5.20)	(37000 x $5.20)
Fixed manufacturing overheads:
Molding department	606690	173340
	(21000 x $28.89)	(6000 x $28.89)
Fabrication department	38940	201190
	(6000 x $6.49)	(31000 x $6.49)
Total manufacturing cost $	1868030	1516930

2-c.

	Job D-70	Job C-200
Total manufacturing cost $	1868030	1516930
Bid Price $	2802045	2275395
	($1868030 x 150%)	($1516930 x 150%)

2-d. Cost of goods sold = $1868030 + $1516930 = $3384960