Question

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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		20,000		32,000		52,000
Fixed manufacturing overhead cost	$	740,000	$	240,000	$	980,000
Variable manufacturing overhead cost per machine-hour	$	5.00	$	2.00

  

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	$	200,000	$	140,000	$	340,000
Machine-hours		17,000		3,000		20,000

  

Job C-200	Molding		Fabrication		Total
Direct materials cost	$	280,000	$	260,000	$	540,000
Direct labor cost	$	160,000	$	240,000	$	400,000
Machine-hours		3,000		29,000		32,000

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

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?

Answer 1

2a
Estimated Variable manufacturing overhead	164000	=(20000*5)+(32000*2)
Estimated Fixed manufacturing overhead	980000
Total Estimated manufacturing overhead	1144000
Divide by Estimated Machine hours	52000
Predetermined overhead rate	22.00	per MH
b
	Job D-70	Job C-200
Direct materials cost	690000	540000
Direct labor cost	340000	400000
Overhead applied	440000	704000
Total manufacturing cost	1470000	1644000
c
	Job D-70	Job C-200
Total manufacturing cost	1470000	1644000
Add: Markup @50%	735000	822000
Bid prices	2205000	2466000
d
Total manufacturing cost Job D-70	1470000
Total manufacturing cost Job C-200	1644000
Cost of goods sold	3114000
Workings:
	Job D-70	Job C-200
Overhead applied	=20000*22	=32000*22