Question

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		25,000		35,000		60,000
Fixed manufacturing overhead costs	$	770,000	$	240,000	$	1,010,000
Variable manufacturing overhead cost per machine-hour	$	5.70	$	5.70

  

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	$	329,000	$	704,000
Direct labor cost	$	200,000	$	170,000	$	370,000
Machine-hours		17,000		8,000		25,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	210,000	$	250,000	$	460,000
Direct labor cost	$	170,000	$	230,000	$	400,000
Machine-hours		8,000		27,000		35,000

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. (Round the final answers to 2 decimal places.)

	Pre determined overhead rates Molding Department per MH Fabrication Department per MH

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.(Round your intermediate calculations to 2 decimal places. Round your final answers to nearest whole dollar amount.)

	Total manufacturing cost Job D-70 Job C-200

c. If Delph establishes bid prices that are 130% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-200? (Round your intermediate calculations to 2 decimal places. Round your final answers to nearest whole dollar amount.)

	Bid price Job D-70 Job C-200

d. What is Delph’s cost of goods sold for the year? (Round your intermediate calculations to 2 decimal places. Round your final answer to nearest whole dollar amount.

	Cost of goods sold

Answer 1

Solution 2a:

Computation of Departmental overhead rate - Delph
Particulars	Molding	Fabrication
Fixed overhead	$770,000.00	$240,000.00
Variable overhead	$142,500.00	$199,500.00
Total overhead	$912,500.00	$439,500.00
Machine hours	$25,000.00	$35,000.00
Overhead rate per machine hour	$36.50	$12.56

Solution 2b:

Compuatation of manufacturing cost assigned to Job - Delph
Particulars	Job D70	Job C200
Direct Material	$704,000.00	$460,000.00
Direct Labor	$370,000.00	$400,000.00
Manufacturing overhead - Molding D 70 - 17000*$36.50 C200 - 8000*$36.50	$620,500.00	$292,000.00
Manufacturing overhead - Fabrication D 70 - 8000*$12.56 C200 - 27000*$12.56	$100,480.00	$339,120.00
Total Manufacturing cost	$1,794,980.00	$1,491,120.00

Solution 2c:

Compuatation of Bid Price
Particulars	Job D70	Job C200
Manufacturing Cost	$1,794,980.00	$1,491,120.00
Markup (30%)	$538,494.00	$447,336.00
Bid Price of Job	$2,333,474.00	$1,938,456.00

Solution 2d:

Cost of goods sold for the year = $1,794,980 + $1,491,120 = $3,286,100