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		20,000		30,000	50,000
Fixed manufacturing overhead costs	$	700,000	$	210,000	$ 910,000
Variable manufacturing overhead cost per machine-hour	$	3.00	$	1.00

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	$	375,000	$	325,000	$	700,000
Direct labor cost	$	200,000	$	160,000	$	360,000
Machine-hours		14,000		6,000		20,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	300,000	$	250,000	$	550,000
Direct labor cost	$	175,000	$	225,000	$	400,000
Machine-hours		6,000		24,000		30,000

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?

Compute the departmental predetermined overhead rates.

	Pre determined overhead rates Molding Department      Fabrication Department

Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

	Total manufacturing cost Job D-70 Job C-200

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?

	Bid price Job D-70 Job C-200

What is Delph’s cost of goods sold for the year?

	Cost of goods sold

·

Answer 1

OH rate:
Molding
Fixed overheads		700000
Divide: MH		20000
Fixed OH per MH			35
variable OH per Mh			3
OH rate per MH			38
Fabrication:
Fixed overheads		210000
Divide: MH		30000
Fixed OH per MH			7
variable OH per Mh			1
OH rate per MH			8
Req 2.
Job D-70
		Molding	Fabrication	Total
Material		375000	325000	700000
Labour		200000	160000	360000
Overheads		532000	48000	580000
		(14000*38)	(6000*8)
Total cost		1107000	533000	1640000
Job C-200
		Molding	Fabrication	Total
Material		300000	250000	550000
Labour		175000	225000	400000
Overheads		228000	192000	420000
		(6000*38)	(24000*8)
Total cost		703000	667000	1370000
Req 3.
		Job D-70	Job C-200
Total cost		1640000	1370000
Add: 50% Markup		820000	685000
Bid pricec		2460000	2055000
Req 4.
Cost of goods sold
D-70		1640000
C-200		1370000
Total COGS		3010000