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: Machine-hours Fixed manufacturing overhead costs Variable manufacturing overhead cost per machine-hour Molding Fabrication Total 23,000 32,000 55,000 $ 720,000 $ 220,000 $ 940,000 S 4.00 $ 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: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 370,000 $ 320,000 $ 690,000 $ 220,000 $ 160,000 $ 380,000 13,000 10,000 23,000 Job C-200: Direct materials cost Direct labor cost Machine-hours Molding Fabrication Total $ 200,000 $ 280,000 $ 480,000 $ 140,000 $ 260,000 $400,000 10,000 22,000 32,000 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 150% 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?

Answer 1

1.

(a) Computation of plant predetermined Overhead rate

	Molding	Fabrication
Total VOH(MH*VMOH cost per MH)	92000(23000*4)	32000(32000*1)
Total FOH	720,000	220,000
Total cost of overheads	812000	252000
MH	23000	32000
Rate per MH	35.304	7.875

(b)

	Job D-70	Job C-200
DM	690,000	480,000
DL	380,000	400,000
OH applied
Molding	13000*35.304=458,952	10,000*35.304=353040
Fabrication	10,000*7.875=78750	22,000*7.875=173,250
Total MC	1,607,702	1,406,290

(c)

	Job D-70	Job C-200
Total MC	1,607,702	1,406,290
Bid price (MC*150%)	2,411,553	2,109,435

(d) cost of goods sold for the year = 1,607,702+1,406,920 = 3,013,992

	Job D-70	Job C200
COGS	1,607,702	1,406,290