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		20,000		30,000	50,000
Fixed manufacturing overhead costs	$	700,000	$	210,000	$ 910,000
Variable manufacturing overhead cost per machine-hour	$	3.00	$	1.00

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	$	375,000	$	325,000	$	700,000
Direct labor cost	$	200,000	$	160,000	$	360,000
Machine-hours		14,000		6,000		20,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	300,000	$	250,000	$	550,000
Direct labor cost	$	175,000	$	225,000	$	400,000
Machine-hours		6,000		24,000		30,000

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 150% 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

	Molding	Fabrication
Fixed manufacturing overhead cost	700,000	210,000
Machine hours	20,000	30,000
Fixed manufacturing rate per hour	35.00	7.00
Variable manufacturing overhead rate	3.00	1.00
Pre determined overhead rate	38.00	8.00
Cost Assigned
	D-70	C-200
Direct Material cost	700,000	550,000
Direct Labor Cost	360,000	400,000
Overheads:
Molding	532,000	228,000
Fabrication	48,000	192,000
Total cost assigned	1,640,000	1,370,000
Bid Price
	D-70	C-200
Total cost	1,640,000	1,370,000
Bid Price	2,460,000	2,055,000
Cost of Goods sold = Cost of jobs	3,010,000