Question

In 2 and 3) Required Information [The following information applies to the questions displayed below.) 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: Machine-hours Pixed manufacturing overhead costs Variable manufacturing overhead cont per machine-hour Molding Fabrication 23,000 33.000 $ 750,000 $ 220,000 $ 5.70 $ 5.70 Total 56.000 $970,000 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-701 Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 377,000 $ 324,000 $ 701,000 $ 210,000 $ 180,000 $ 390,000 15,000 8,000 23,000 Job C-2001 Direct materials cost Direct labor cost Machine-hours Molding Tabrication Total $240,000 $200,000 $440,000 $ 120.000 $ 270,000 $ 390,000 8,000 25,000 33,000 Delph had no underapplied or overapplied manufacturing overhead during the year. Required: 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. I 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-2007 d. What is Delph's cost of goods sold for the year?

Answer 1

(1a)Predetermine OH Rate = (Fixed OH/Machine Hours) + Variable OH per hour

                 = ($970000/56000) + $5.70 = $23.02 per machine hour

(1b) Total Manufacturing cost:-

D-70 = Direct Material cost + Direct Labor + Overhead

               = $701000 + $390000 + (23000 hours * $23.02) = $1620460

C-200 = Direct Material cost + Direct Labor + Overhead

              = $440000 + $390000 + (33000 hours * $23.02) = $1589660

(1c)Bid Price:-

D-70 = Total Manufacturing cost * 120%

         = $1620460 * 120% = $1944552

C-200 = $1589660 * 120% = $1907592

(1d) Cost of Goods sold = Total Manufacturing cost of D-70 (+) Total Manufacturing cost of C-200

                 = $1620460 + $1589660 = $3210120