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		28,000		38,000		66,000
Fixed manufacturing overhead costs	$	760,000	$	230,000	$	990,000
Variable manufacturing overhead cost per machine-hour	$	5.50	$	5.50

  

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	$	326,000	$	701,000
Direct labor cost	$	240,000	$	150,000	$	390,000
Machine-hours		19,000		9,000		28,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	230,000	$	260,000	$	490,000
Direct labor cost	$	140,000	$	260,000	$	400,000
Machine-hours		9,000		29,000		38,000

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	$                        760,000	$                          230,000
B	Total machine hours	28,000	38,000
C = A/B	Fixed overhead rate	$                            27.14	$                                 6.05
D	Variable Overhead rate	$                               5.50	$                                 5.50
E = C+D	Predetermined Departmental Overhead rates	$                            32.64	$                              11.55

[b]

	Job D 70	Job C 200
Molding Department:
Direct material cost	$                        375,000	$                          230,000
Direct Labor cost	$                        240,000	$                          140,000
Manufacturing Overhead	$                        620,160	$                          293,760
Fabrication Department:
Direct material cost	$                        326,000	$                          260,000
Direct Labor cost	$                        150,000	$                          260,000
Manufacturing Overhead	$                        103,950	$                          334,950
Total manufacturing cost assigned	$                    1,815,110	$                      1,518,710	ANSWERS

[c]

		Job D 70	Job C 200
A	Total manufacturing cost assigned	$                    1,815,110	$                      1,518,710
B = A x 140%	Bid Price	$                    2,541,154	$                      2,126,194

[d]

Total manufacturing cost assigned
Job D 70	$                    1,815,110
Job C 200	$                    1,518,710
Cost of Goods Sold	$                    3,333,820