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 32,000 53,000 Fixed manufacturing overhead cost \$ 700,000 \$ 280,000 \$ 980,000 Variable manufacturing overhead cost per machine-hour \$ 3.00 \$ 1.00

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 \$ 320,000 \$ 690,000 Direct labor cost \$ 240,000 \$ 140,000 \$ 380,000 Machine-hours 16,000 5,000 21,000

 Job C-200 Molding Fabrication Total Direct materials cost \$ 280,000 \$ 240,000 \$ 520,000 Direct labor cost \$ 140,000 \$ 240,000 \$ 380,000 Machine-hours 5,000 27,000 32,000

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

Exercise 2-15 (Algo) Part 2

2. Assume Delph chooses to combine its departmental rates from requirement 1 into 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 150% of total manufacturing costs, 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?

2. a. Total manufacturing overhead for molding = \$ 700,000 + 21,000 MH x \$ 3.00 = \$ 763,000

Total manufacturing overhead for fabrication = \$ 280,000 + 32,000 MH x \$ 1.00 = \$ 312,000

Plantwide predetermined overhead rate = \$ ( 763,000 + 312,000 ) / 53,000 MH = \$ 20.28 per machine hour

b.

 Job D-70 Job C-200 Direct materials \$ 370,000 \$ 320,000 Direct labor 240,000 140,000 Manufacturing overhead 425,880 648,960 Total manufacturing costs \$ 1,035,880 \$ 1,108,960

c.

 Job D-70 Job C-200 Total manufacturing costs \$ 1,035,880 \$ 1,108,960 Bid price 1,553,820 1,663,440

d. Cost of goods sold = \$ 1,035,880 + \$ 1,108,960 = \$ 2,144,840

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