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

Delph had no underapplied or overapplied manufacturing overhead during the year.

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)

Predetermined overhead rate    per MH

2)

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

3.

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

4.

Cost of goods sold     

Homework Answers

Answer #1

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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