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: Machine-hours Fixed manufacturing overhead costs Variable manufacturing overhead cost per machine-hour Molding 25,000 $ 730,000 $ 6.00 Fabrication 35,000 $280,000 $ 6.00 Total 60,000 $1,010,000 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: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 371,000 $ 324,000 $ 695,000 $ 230,000 $ 140,000 $ 370,000 17,000 8,000 25,000 Job C-200: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 210,000 $ 220,000 $430,000 $ 120,000 $ 280,000 $400,000 8,000 27,000 35,000 Delph had no underapplied or overapplied manufacturing overhead during the year.

Answer 1

Ans.

1a)

Molding:

Estimated fixed manufacturing overhead = $ 730,000

Estimated variable manufacturing overhead: $6 per MH * 25,000 MHs = $150,000

Estimated total manufacturing overhead cost = $ 880,000

Fabrication:

Estimated fixed manufacturing overhead = $ 280,0000

Estimated variable manufacturing overhead: $6 per MH * 35,000 MHs = $210,000

Estimated total manufacturing overhead cost = $ 490,000

The total estimated manufacturing overhead costs in Molding and Fabrication = $ 880,000 + $ 490,000 = $ 1,370,000

Estimated total machine-hours of Molding and Fabrication = 25,000 + 35,000 = 60,000 MHs

Predetermined overhead rate = Estimated manufacturing overhead costs/Estimated total machine-hours

Predetermined overhead rate = $ 1,370,000 / 60,000 MHs = $ 22.83 per MH

1b)

Total manufacturing cost assigned to Jobs D-70 and C-200:

	Job D -70	Job C - 200
Direct materials cost	$695,000	$430,000
Direct labor cost	$370,000	$400,000
Manufacturing Overhead applied (Note)	$570,750	$799,050
Total Manufacturing Cost	$1,635,750	$1,629,050

Note :

Job D- 70

Manufacturing Overhead applied = 25,000 MHs * $ 22.83 per MH = $ 570,750

Job C - 200

Manufacturing Overhead applied = 35,000 MHs * $ 22.83 per MH = $ 799,050

1c)

Bid prices for Jobs D-70 and C-200

	Job D -70	Job C - 200
Total Manufacturing Cost (a)	$1,635,750	$1,629,050
Markup percentage (b)	130%	130%
Bid price (a) * (b)	$2,126,475	$2,117,765

1d)

Cost of Goods Sold = Total Manufacturing costs assigned to both jobs.

Cost of Goods Sold = $1,635,750 + $1,629,050 = $ 3,264,800