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 20,000 30,000 50,000 Fixed manufacturing overhead costs \$ 700,000 \$ 210,000 \$ 910,000 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 \$ 375,000 \$ 325,000 \$ 700,000 Direct labor cost \$ 200,000 \$ 160,000 \$ 360,000 Machine-hours 14,000 6,000 20,000

 Job C-200: Molding Fabrication Total Direct materials cost \$ 300,000 \$ 250,000 \$ 550,000 Direct labor cost \$ 175,000 \$ 225,000 \$ 400,000 Machine-hours 6,000 24,000 30,000

1. Assume Delph uses 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 cost, 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?

1a) Plantwide predetermine overhead rate = (20000*3+30000*1+910000)/50000 = \$20 per machine hour

1b) Calculate total manufacturing cost

 Job D-70 Job C-200 Direct material 700000 550000 Direct labor 360000 400000 Overhead applied 20000*20 = 400000 30000*20 = 600000 Total manufacturing cost 1460000 1550000

1c) Bid price :

Job D-70 = 1460000*1.5 = \$2190000

Job C-200 = 1550000*1.5 = \$2325000

1d) Cost of goods sold = 1460000+1550000 = \$3010000

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