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	26,000	36,000	62,000
Fixed manufacturing overhead costs	$ 780,000	$200,000	$980,000
Variable manufacturing overhead cost per machine-hour	$ 5.40	$ 5.40

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	$374,000	$322,000	$696,000
Direct labor cost	$220,000	$170,000	$390,000
Machine-hours	17,000	9,000	26,000

Job C-200:	Molding	Fabrication	Total
Direct materials cost $210,000	$210,000	$210,000	$420,000
Direct labor cost	$170,000	$290,000	$460,000
Machine-hours	9,000	27,000	36,000

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

2) Departmental overhead rate :

Molding overhead rate = (780000/26000)+5.40 = 35.40 per Hour

Fabrication overhead rate = (200000/36000)+5.40 = 10.96 per hour

2b) Total manufacturing cost

	Job D-70	Job C-200
Direct material	696000	420000
Direct labor	390000	460000
Molding overhead	601800	318600
Fabrication overhead	98640	295920
Total manufacturing cost	1786440	1494520

2c) Bid price

Job D-70 = 1786440*1.4 = 2501016

Job C-200 = 1494520*1.4 = 2092328

2d) Cost of goods sold = 1786440+1494520 = 3280960