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		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.

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

Answer

• All working forms part of the answer.
• Requirement 2[a]

Working		Molding Department:	Fabrication Department:
A	Total Fixed Overheads	$                  760,000	$                               240,000
B	Total machine hours	29,000	39,000
C = A/B	Fixed overhead rate	$                       26.21	$                                      6.15
D	Variable Overhead rate	$                         6.00	$                                      6.00
E = C+D	Predetermined Departmental Overhead rates	$                       32.21	$                                    12.15

• 2[b]

	Job D 70	Job C 200
Molding Department:
Direct material cost	$                  377,000	$                               290,000
Direct Labor cost	$                  210,000	$                               140,000
Manufacturing Overhead	$                  644,200	$                               289,890
Fabrication Department:
Direct material cost	$                  320,000	$                               270,000
Direct Labor cost	$                  140,000	$                               280,000
Manufacturing Overhead	$                  109,350	$                               364,500
Total manufacturing cost assigned	$               1,800,550	$                            1,634,390

• 2[c]

		Job D 70	Job C 200
A	Total manufacturing cost assigned	$      1,800,550	$                  1,634,390
B = A x 140%	Bid Price	$      2,520,770	$                  2,288,146

• 2[d]

Total manufacturing cost assigned
Job D 70	$                       1,800,550
Job C 200	$                        1,634,390
Cost of Goods Sold	$                        3,434,940