Question

Delph Company uses a job-order costing system and has two manufacturing departments—Molding and Fabrication. The company...

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

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 120% 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?

Molding OH = 730000/34000+6 = 27.47 per MH

Fabrication OH = 300000/44000+6 = 12.82 per MH

2b) Total manufacturing cost

 Job D-70 Job C-200 Direct material 696000 460000 Direct labor 380000 370000 Molding overhead 659280 274700 Fabrication overhead 128200 435880 Total manufacturing cost 1863480 1540580

2c) Job D-70 = 1863480*1.2 = 2236176

Job C-200 = 1540580*1.2 = 1848696

2d) Cost of goods sold = 1863480+1540580 = 3404060

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