In: Accounting
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 | 33,000 | 43,000 | 76,000 | ||||
Fixed manufacturing overhead costs | $ | 730,000 | $ | 270,000 | $ | 1,000,000 | |
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 | $ | 374,000 | $ | 323,000 | $ | 697,000 |
Direct labor cost | $ | 220,000 | $ | 120,000 | $ | 340,000 |
Machine-hours | 25,000 | 8,000 | 33,000 | |||
Job C-200: | Molding | Fabrication | Total | |||
Direct materials cost | $ | 260,000 | $ | 230,000 | $ | 490,000 |
Direct labor cost | $ | 140,000 | $ | 250,000 | $ | 390,000 |
Machine-hours | 8,000 | 35,000 | 43,000 | |||
Delph had no underapplied or overapplied manufacturing overhead during the year.
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?
1 | Computation of the departmental predetermine overhead rates | |||
Moulding | Fabrication | |||
FMOH | $730,000 | $270,000 | ||
Machine Hrs | 33000 | 43000 | ||
Fixed MOH per MH | $22.12 | $6.28 | ||
Variable MOH per MH | $5.20 | $5.20 | ||
Departmental OH per MH | $27.32 | $11.48 | ||
2 | Computation of Total Manufacturing Cost Assigned to Job D-70 and Job -C 200 | |||
Job D70 | Job C200 | |||
DM | $697,000 | $490,000 | ||
DL | $340,000 | $390,000 | ||
MOH | ||||
33000*$27.32 | $901,560 | |||
43000*$11.48 | $493,640 | |||
Total Cost Assigned | $1,938,560 | $1,373,640 | ||
3 | Computation of Total Manufacturing Cost Assigned to Job D-70 and Job -C 200 | |||
Job D70 | Job C200 | |||
DM | $374,000 | $323,000 | ||
DL | $220,000 | $120,000 | ||
MOH | ||||
33000*$27.32 | $901,560 | |||
43000*$11.48 | $493,640 | |||
Total Cost Assigned | $1,495,560 | $936,640 | ||
150% of Manifacturing cost | $2,243,340 | $1,404,960 | ||
4 | Cost of good sold | Job D70 | Job C200 | |
DM | $697,000 | $490,000 | ||
DL | $340,000 | $390,000 | ||
MOH | ||||
33000*$27.32 | $901,560 | |||
43000*$11.48 | $493,640 | |||
Total Cost Assigned | $1,938,560 | $1,373,640 | ||
Cost of Good Sold | $3,312,200 |