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 21,000 31,000 52,000 Fixed manufacturing overhead costs \$ 710,000 \$ 210,000 \$ 920,000 Variable manufacturing overhead cost per machine-hour \$ 5.70 \$ 5.70

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 \$ 377,000 \$ 329,000 \$ 706,000 Direct labor cost \$ 240,000 \$ 160,000 \$ 400,000 Machine-hours 15,000 6,000 21,000

 Job C-200: Molding Fabrication Total Direct materials cost \$ 260,000 \$ 270,000 \$ 530,000 Direct labor cost \$ 130,000 \$ 290,000 \$ 420,000 Machine-hours 6,000 25,000 31,000

Required:

Assume Delph uses a plantwide predetermined overhead rate based on machine-hours.

Compute the plantwide predetermined overhead rate.

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

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?

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

QUESTIONS:

1)

2)

 Total Manufacturing Cost Job D-70 ? Job C-200 ?

3.

 Bid price Job D-70 ? Job C-200 ?

4.

 Cost of goods sold

Solution  1a:

Plantwide predetermined overhead rate = Estimated overhead / Estimated machine hours = [(21000*\$5.70) + (31000*\$5.70) + \$920,000] / 52000

= \$23.39 per machine hour

 Solution 1b: Compuatation of manufacturing cost assigned to Job - Delph Particulars Job D70 Job C200 Direct Material \$706,000.00 \$530,000.00 Direct Labor \$400,000.00 \$420,000.00 Manufacturing overhead D 70 - 21000*\$23.39 C200 - 31000*\$23.39 \$491,190.00 \$725,090.00 Total Manufacturing cost \$1,597,190.00 \$1,675,090.00 Solution 1c: Compuatation of Bid Price Particulars Job D70 Job C200 Manufacturing Cost \$1,597,190.00 \$1,675,090.00 Markup (20%) \$319,438.00 \$335,018.00 Bid Price of Job \$1,916,628.00 \$2,010,108.00

Solution 1d:

Cost of goods sold for the year = \$1,597,190 + \$1,675,090 = \$3,272,280

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