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		34,000		44,000		78,000
Fixed manufacturing overhead costs	$	720,000	$	230,000	$	950,000
Variable manufacturing overhead cost per machine-hour	$	5.60	$	5.60

  

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	$	370,000	$	329,000	$	699,000
Direct labor cost	$	250,000	$	130,000	$	380,000
Machine-hours		25,000		9,000		34,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	280,000	$	210,000	$	490,000
Direct labor cost	$	150,000	$	300,000	$	450,000
Machine-hours		9,000		35,000		44,000

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

a) Compute the departmental predetermined overhead rates:

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

c) Calculate bid prices for Job D-70 and Job C-200:

d) Delph's cost of goods sold for the year: