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 | 29,000 | 39,000 | 68,000 | ||||
Fixed manufacturing overhead costs | $ | 760,000 | $ | 240,000 | $ | 1,000,000 | |
Variable manufacturing overhead cost per machine-hour | $ | 6.00 | $ | 6.00 | |||
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 | $ | 377,000 | $ | 320,000 | $ | 697,000 |
Direct labor cost | $ | 210,000 | $ | 140,000 | $ | 350,000 |
Machine-hours | 20,000 | 9,000 | 29,000 | |||
Job C-200: | Molding | Fabrication | Total | |||
Direct materials cost | $ | 290,000 | $ | 270,000 | $ | 560,000 |
Direct labor cost | $ | 140,000 | $ | 280,000 | $ | 420,000 |
Machine-hours | 9,000 | 30,000 | 39,000 | |||
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. If Delph establishes bid prices that are 140% 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?
Solution a to d:
Computation of Plantwide predetermined Overhead Rate | ||
Fixed Manufacturing Overhead costs | $10,00,000 | |
Variable
Manufacturing Overhead cost [(29000*$6) + (39000*$6)] |
$4,08,000 | |
Total Estimated Overhead costs (a) | $14,08,000 | |
/Total Estimated Machine Hours (b) | 68000 | |
Plantwide Overhead Rate (a/b) | $20.71 | |
Computation of Total Manufacturing Costs | ||
Job D-70 | Job C-200 | |
Direct Material Costs | $6,97,000 | $5,60,000 |
Direct Labor Costs | $3,50,000 | $4,20,000 |
Manufacturing Overhead costs (Total Machine Hours*$20.71) |
$6,00,590 | $8,07,690 |
Total Manufacturing Costs | $16,47,590 | $17,87,690 |
Computation of Bid Prices | ||
Job D-70 | Job C-200 | |
Total Manufacturing Costs | $16,47,590 | $17,87,690 |
Bid price (Total Manufacturing Costs*140%) | $23,06,626 | $25,02,766 |
Computation of Delph's Cost of Goods sold | ||
Total Manufacturing Costs of Job D-70 | $16,47,590 | |
Total Manufacturing Costs of Job C-200 | $17,87,690 | |
Total Cost of Goods sold | $34,35,280 |
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 29,000 39,000 68,000 Fixed manufacturing overhead costs $ 760,000 $ 240,000 $ 1,000,000 Variable manufacturing overhead cost per machine-hour $ 6.00 $ 6.00 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...
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 29,000 39,000 68,000 Fixed manufacturing overhead costs $ 730,000 $ 270,000 $ 1,000,000 Variable manufacturing overhead cost per machine-hour $ 6.10 $ 6.10 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...
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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 32,000 42,000 74,000 Fixed manufacturing overhead costs $ 770,000 $ 270,000 $ 1,040,000 Variable manufacturing overhead cost per machine-hour $ 5.40 $ 5.40 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...