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		34,000		44,000		78,000
Fixed manufacturing overhead costs	$	760,000	$	230,000	$	990,000
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 provided the following information related to those two jobs:

  

Job D-70:	Molding		Fabrication		Total
Direct materials cost	$	375,000	$	327,000	$	702,000
Direct labor cost	$	220,000	$	170,000	$	390,000
Machine-hours		24,000		10,000		34,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	270,000	$	250,000	$	520,000
Direct labor cost	$	170,000	$	260,000	$	430,000
Machine-hours		10,000		34,000		44,000

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 120% 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?

Compute the departmental predetermined overhead rates. (Round the final answers to 2 decimal places.)

	Pre determined overhead rates Molding Department $28.45 per MH Fabrication Department per MH

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

If Delph establishes bid prices that are 120% 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 the nearest whole dollar amount.)

	Bid price Job D-70 Job C-200

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

a)	Predetermined overhead rates
	Molding
	= (fixed overhead cost / Number of machine hours ) + Variable overhead cost per machine hours
	= ($760000/34000) +$6.1
	=$22.35+6.1
	=$28.45per MH
	Fabrication
	= (fixed overhead cost / Number of labor hours ) + Variable overhead cost per labor hours
	=($230000/44000) +$6.1
	=$5.23+6.1
	=$11.33	per MH
	total manufacturing cost recorded for D70
		Department		Total
		Molding	Fabrication
	Direct materials	$            3,75,000	$            3,27,000	$            7,02,000
	Direct labor	$            2,20,000	$            1,70,000	$            3,90,000
	Manufacturing overhead	$            6,82,800	$            1,13,300	$            7,96,100
	Total cost	$          12,77,800	$            6,10,300	$          18,88,100
	total manufacturing cost recorded for C200
		Department		Total
		Molding	Fabrication
	Direct materials	$            2,70,000	$            2,50,000	$            5,20,000
	Direct labor	$            1,70,000	$            2,60,000	$            4,30,000
	Manufacturing overhead	$            2,84,500	$            3,85,220	$            6,69,720
	Total cost	$            7,24,500	$            8,95,220	$          16,19,720
c)		D-70	C-200
	Total Manufacturing Cost	$          18,88,100	$          16,19,720
	Add:
	Markup @120%	$      22,65,720.0	$      19,43,664.0
	Bid Price	$    41,53,820.00	$    35,63,384.00
d)	Cost of goods sold =$1888100+1619720
	$                                 35,07,820
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