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		28,000		38,000	66,000
Fixed manufacturing overhead costs	$	720,000	$	230,000	$ 950,000
Variable manufacturing overhead per machine-hour	$	5.30	$	5.30

  

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	$	379,000	$	321,000	$	700,000
Direct labor cost	$	230,000	$	170,000	$	400,000
Machine-hours		19,000		9,000		28,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	240,000	$	230,000	$	470,000
Direct labor cost	$	150,000	$	260,000	$	410,000
Machine-hours		9,000		29,000		38,000

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

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

  

Required:

1-a.

Compute the predetermined plantwide overhead rate. (Round your answer to 2 decimal places.)

Predetermined overhead rate

per MH

1-b.	Compute the total manufacturing costs assigned to Job D-70 and Job C-200. (Round your intermediate calculations to 2 decimal places.)

	Total manufacturing cost
Job D-70
Job C-200

1-c.	If Delph establishes bid prices that are 130% of total manufacturing costs, what bid price would it have established for Job D-70 and Job C-200? (Round your intermediate calculations to 2 decimal places.)

	Bid price
Job D-70
Job C-200

1-d.	What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places.)

Cost of goods sold

Answer 1

a). Predetermined overhead rate = Variable overhead rate + Total fixed manufacturing overhead cost / Total machine hours
= $5.30 + $950,000 / 66,000 hours
= $5.30 + $14.39
= $19.69 per machine hours

b). Calculation of Total manufacturing cost:
Job D-70:
Direct material cost = $700,000
Direct labor cost = $400,000
Manufacturing overhead ($19.69 * 28,000 hours) = $551,320
Total manufacturing cost = $1,651,320

Job C-200:
Direct material cost = $470,000
Direct labor cost = $410,000
Manufacturing overhead ($19.69 * 38,000 hours) = $748,220
Total manufacturing cost = $1,628,220

c). Calculation of Bid Price:
Job D-70 ($1,651,320 * 130%) = $2,146,716
Job C-200 ($1,628,220 * 130%) = $2,116,686

d). Cost of Goods sold = $1,651,320 + $1,628,220 = $3,279,540