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	$	710,000	$	240,000	$	950,000
Variable manufacturing overhead cost per machine-hour	$	5.40	$	5.40

  

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	$	370,000	$	328,000	$	698,000
Direct labor cost	$	230,000	$	130,000	$	360,000
Machine-hours		18,000		6,000		24,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	280,000	$	240,000	$	520,000
Direct labor cost	$	160,000	$	290,000	$	450,000
Machine-hours		6,000		28,000		34,000

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 140% 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

Total manufacturing Overheads
Variable overheads
Molding (24000*5.40)	129600
Fabrication (34000*5.40)	1,83,600
Total variable overheads	3,13,200
Total Fixed overheads	9,50,000
Total manufacturing Overheads	12,63,200
Divide: Total MH		58000
OH rate per MH		21.78
			Job D-70	Job C-200
Total MH worked
Molding			18000	6000
fabrocation		6000	28000
Total MH worked		24000	34000
Multiply: OH rate per MH	21.78	21.78
Total Overheads applied	522720	740480
Total Manufacturing Cost
			Job D-70	Job C-200
Material of Molding		370000	280000
material of fabrication	328000	240000
Labor of Molding		230000	160000
Labor of Fabrication		130000	290000
Overheads applied		522720	740480
Total manufacturing cost	1580720	1710480
Bid prices
			Job D-70	Job C-200
Total Manufacturing cost	1580720	1710480
Add: Markup 40%		632288	684192
Bid price			2213008	2394672
Cost of goods sold
Cost of Job D-70	1580720
Cost of Job C-200	1710480
Cost of goods sold	3291200