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. Required: 1. Assume Delph uses a plantwide predetermined overhead rate based on machine-hours. a. Compute the plantwide predetermined overhead rate. 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 cost, 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

Answer to Part a.

Predetermined Overhead rate = Estimated Manufacturing Overhead / Estimated Machine Hour
Estimated Manufacturing Overhead = Variable Manufacturing Overhead + Fixed Manufacturing Overhead

Molding Department:
Estimated Manufacturing Overhead = (27,000 * $5.20) + $780,000
Estimated Manufacturing Overhead = $140,400 + $780,000
Estimated Manufacturing Overhead = $920,400

Predetermined Overhead rate = 920,400 / 27,000
Predetermined Overhead rate = $34.09

Fabrication Department:
Estimated Manufacturing Overhead = (37,000 * $5.20) + $240,000
Estimated Manufacturing Overhead = $192,400 + $240,000
Estimated Manufacturing Overhead = $432,400

Predetermined Overhead rate = 432,400 / 37,000
Predetermined Overhead rate = $11.69

Answer to Part b.

Job D-70:

Total Manufacturing Cost of Molding Department = $373,000 + $230,000 + (21,000 * $34.09)
Total Manufacturing Cost of Molding Department = $373,000 + $230,000 + $715,890
Total Manufacturing Cost of Molding Department = $1,318,890

Total Manufacturing Cost of Fabrication Department = $329,000 + $150,000 + (6,000 * $11.69)
Total Manufacturing Cost of Fabrication Department = $329,000 + $150,000 + $70,140
Total Manufacturing Cost of Fabrication Department = $549,140

Total Manufacturing Cost assigned to Job D-70 = $1,318,890 + $549,140
Total Manufacturing Cost assigned to Job D-70 = $1,868,030

Job C-200:

Total Manufacturing Cost of Molding Department = $280,000 + $120,000 + (6,000 * $34.09)
Total Manufacturing Cost of Molding Department = $280,000 + $120,000 + $204,540
Total Manufacturing Cost of Molding Department = $604,540

Total Manufacturing Cost of Fabrication Department = $290,000 + $260,000 + (31,000 * $16.01)
Total Manufacturing Cost of Fabrication Department = $290,000 + $260,000 + $362,390
Total Manufacturing Cost of Fabrication Department = $912,390

Total Manufacturing Cost assigned to Job C-200 = $604,540 + $912,390
Total Manufacturing Cost assigned to Job C-200 = $1,516,930

Answer to Part c.

Bid Price of Job D-70 = $1,868,030 * 150%
Bid Price of Job D-70 = $2,802,045

Bid Price of Job C-200 = $1,516,930 * 150%
Bid Price of Job C-200 = $2,275,395

Answer to Part d.

Total Cost of Goods Sold for the year = $1,868,030 + $1,516,930
Total Cost of Goods Sold for the year = $3,384,960