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)
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2)
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3.
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4.
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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 |
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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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