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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	$	730,000	$	260,000	$	990,000
Variable manufacturing overhead cost per machine-hour	$	5.30	$	5.30

  

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	$	378,000	$	322,000	$	700,000
Direct labor cost	$	230,000	$	170,000	$	400,000
Machine-hours		21,000		8,000		29,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	250,000	$	300,000	$	550,000
Direct labor cost	$	150,000	$	240,000	$	390,000
Machine-hours		8,000		31,000		39,000

Delph had no underapplied or overapplied manufacturing overhead during the year.

Required:

1. Assume Delph uses a plantwide predetermined overhead rate based on machine-hours.

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost assigned to Job D-70 and Job C-200.

c. If Delph establishes bid prices that are 130% of total manufacturing cost, 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?

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 130% 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

1-a.
	Molding	Fabrication	Total
Estimated total machine hours used	29000	39000	68000
(*) Estimated variable manufacturing overhead per machine hour	5.30	5.30
Estimated total variable manufacturing overhead	153700	206700	360400
Estimated total fixed manufacturing overhead	730000	260000	990000
Estimated total manufacturing overhead	883700	466700	1350400

Plantwide predetermined overhead rate = Estimated total manufacturing overhead / Estimated total machine hours used = 1350400 / 68000

19.86

per MH

1-b.
	Job D-70	Job C-200
Total actual machine hours used	29000	39000
Plantwide predetermined overhead rate	19.86	19.86
Manufacturing overhead applied	575940	774540
	Job D-70	Job C-200
Direct materials	700000	550000
Direct labor cost	400000	390000
Manufacturing overhead applied	575940	774540
Total manufacturing cost	1675940	1714540

1-c.
	Job D-70	Job C-200
Total manufacturing cost	1675940	1714540
Bid price [ @ 130% of total manufacturing cost ]	2178722	2228902

1-d.
Cost of goods sold = Total manufacturing cost of the Jobs sold = 1675940 + 1714540	3390480

2-a.
	Pre determined overhead rates
Molding Department [ ( 730000 / 29000 ) + 5.30 ]	30.47	per MH
Fabrication Department [ ( 260000 / 39000 ) + 5.30 ]	11.97	per MH

2-b.
	Job D-70		Job C-200
Direct materials cost		700000		550000
Direct labor cost		400000		390000
Overhead allocated :
Molding Department	639870 [ 21000*30.47 ]		243760 [ 8000*30.47 ]
Fabrication Department	95760 [ 8000*11.97 ]	735630	371070 [ 31000*11.97 ]	614830
Total manufacturing cost		1835630		1554830

2-c.
	Bid price [ 130% of total manufacturing cost ]
Job D-70 [ 1835630 * 130% ]	2386319
Job C-200 [ 1554830 * 130% ]	2021279

2-d.
Cost of goods sold = Total manufacturing cost of sold = 1835630 + 1554830	3390460