Question

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:

  

	Molding		Fabrication			Total
Machine-hours		31,000		41,000		72,000
Fixed manufacturing overhead costs	$	710,000	$	240,000	$	950,000
Variable manufacturing overhead cost per machine-hour	$	5.80	$	5.80

  

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	$	374,000	$	321,000	$	695,000
Direct labor cost	$	210,000	$	130,000	$	340,000
Machine-hours		21,000		10,000		31,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	280,000	$	260,000	$	540,000
Direct labor cost	$	180,000	$	280,000	$	460,000
Machine-hours		10,000		31,000		41,000

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

2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.

a. Compute the departmental predetermined overhead rates.

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

c. If Delph establishes bid prices that are 140% 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

Answers

• All working forms part of the answer
• Requirement 2 ‘a’

Working		Molding Department:	Fabrication Department:
A	Total Fixed Overheads	$              710,000	$             240,000
B	Total machine hours	31,000	41,000
C = A/B	Fixed overhead rate	$                   22.90	$                    5.85
D	Variable Overhead rate	$                     5.80	$                    5.80
E = C+D	Plantwide overhead rate	$                   28.70	$                 11.65

• Requirement 2 ‘b’

	Job D 70	Job C 200
Molding Department:
Direct material cost	$              374,000	$             280,000
Direct Labor cost	$              210,000	$             180,000
Manufacturing Overhead	$              602,700 [21000 x 28.70]	$             287,000 [10000 x 28.70]
Fabrication Department:
Direct material cost	$              321,000	$             260,000
Direct Labor cost	$              130,000	$             280,000
Manufacturing Overhead	$              116,500 [10000 x 11.65]	$             361,150 [31000 x 11.65]
Total manufacturing cost assigned	$          1,754,200	$         1,648,150

• Requirement 2 ‘c’

		Job D 70	Job C 200
A	Total manufacturing cost assigned	$        1,754,200	$               1,648,150
B = A x 140%	Bid Price	$        2,455,880	$               2,307,410

• Requirement 2 ‘d’

--Since there were no beginning or ending work in process, cost of goods sold would be sum of cost of the two jobs completed and sold.

--Cost of Goods Sold = 1754200 + 1648150 = $ 3,402,350

Answer = $ 3,402,350