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		34,000		44,000		78,000
Fixed manufacturing overhead costs	$	720,000	$	230,000	$	950,000
Variable manufacturing overhead cost per machine-hour	$	5.60	$	5.60

  

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	$	329,000	$	699,000
Direct labor cost	$	250,000	$	130,000	$	380,000
Machine-hours		25,000		9,000		34,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	280,000	$	210,000	$	490,000
Direct labor cost	$	150,000	$	300,000	$	450,000
Machine-hours		9,000		35,000		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 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

1a)	predetermined overhead rate
	variable overhead rate					5.6
	fixed manufacturing overhead			(950,000/78000)=		12.18
	predetermined overhead rate					17.78
1b)	total manufacturing cost assinged
	D-70
	Direct materials cost					699,000
	direct labor cost					380,000
	overhead assigned					604503
	total manufacturing cost					1,683,503
	job c-200
	Direct materials cost					490,000
	direct labor cost					450,000
	overhead assigned					782297
	total manufacturing cost					1,722,297
				total manufacturing
				cost
	job D-70			1,683,503
	Job C-200			1,722,297
1c)	Bid price
				cost
	job D-70			2,356,904
	Job C-200			2,411,216
1d)	cost of goods sold			3,405,800