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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 | 34,000 | 44,000 | 78,000 | ||||
| Fixed manufacturing overhead costs | $ | 730,000 | $ | 300,000 | $ | 1,030,000 | |
| Variable manufacturing overhead cost per machine-hour | $ | 6.00 | $ | 6.00 | |||
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 | $ | 374,000 | $ | 322,000 | $ | 696,000 |
| Direct labor cost | $ | 230,000 | $ | 150,000 | $ | 380,000 |
| Machine-hours | 24,000 | 10,000 | 34,000 | |||
| Job C-200: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 210,000 | $ | 250,000 | $ | 460,000 |
| Direct labor cost | $ | 140,000 | $ | 230,000 | $ | 370,000 |
| Machine-hours | 10,000 | 34,000 | 44,000 | |||
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 120% 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?
Solution 1a:
Plantwide predetermined overhead rate = Estimated overhead / Estimated machine hours = [(34000*$6) + (44000*$6) + $1,030,000] / 78000
= $19.21 per machine hour
| Solution 1b: | ||
| Compuatation of manufacturing cost assigned to Job - Delph | ||
| Particulars | Job D70 | Job C200 |
| Direct Material | $696,000.00 | $460,000.00 |
| Direct Labor | $380,000.00 | $370,000.00 |
| Manufacturing overhead D 70 - 34000*$19.21 C200 - 44000*$19.21 |
$653,140.00 | $845,240.00 |
| Total Manufacturing cost | $1,729,140.00 | $1,675,240.00 |
| Solution 1c: | ||
| Compuatation of Bid Price | ||
| Particulars | Job D70 | Job C200 |
| Manufacturing Cost | $1,729,140.00 | $1,675,240.00 |
| Markup (20%) | $345,828.00 | $335,048.00 |
| Bid Price of Job | $2,074,968.00 | $2,010,288.00 |
Solution 1d:
Cost of goods sold for the year = $1,729,140 + $1,675,240 = $3,404,380
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