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 | 21,000 | 31,000 | 52,000 | ||||
Fixed manufacturing overhead costs | $ | 700,000 | $ | 300,000 | $ | 1,000,000 | |
Variable manufacturing overhead cost per machine-hour | $ | 4.00 | $ | 1.50 | |||
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 | $ | 320,000 | $ | 690,000 |
Direct labor cost | $ | 220,000 | $ | 140,000 | $ | 360,000 |
Machine-hours | 16,000 | 5,000 | 21,000 | |||
Job C-200: | Molding | Fabrication | Total | |||
Direct materials cost | $ | 300,000 | $ | 240,000 | $ | 540,000 |
Direct labor cost | $ | 120,000 | $ | 240,000 | $ | 360,000 |
Machine-hours | 5,000 | 26,000 | 31,000 | |||
Delph had no underapplied or overapplied manufacturing overhead during the year.
rev: 07_13_2020_QC_CS-217627, 09_05_2020_QC_CS-224324
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?
Solution: A | ||||||
CACLULATION OF OVERHEAD APPLICATION RATE PER MACHINE HOURS | ||||||
Overhead Application Rate = | Budgeted Fixed Manufacturing Overhead Cost | "/" | Budgeted Machine Hours | "=" | Estimated Overhead rate PER Machine Hrs | |
Overhead Application Rate = | $ 10,00,000 | "/" | 52,000 | "=" | $ 19.23 | |
Solution: B | ||||||
CALCULATION OF TOTAL MANUFACTURING COST ASSIGNED TO JOB D-70 AND JOB C -200 | ||||||
Job D - 70 | Job C - 200 | |||||
Direct Materials | $ 6,90,000 | $ 5,40,000 | ||||
Direct Labor Cost | $ 3,60,000 | $ 3,60,000 | ||||
Variable Manufacturing overhead | $ 71,500 | $ 59,000 | ||||
(16,000X$ 4+5000X$ 1.50) | (5,000X$ 4+26000X$ 1.50) | |||||
Fixed Manufacturing overhead | $ 4,03,846 | $ 5,96,154 | ||||
(21,000 Hrs X $ 19.23) | (31,000 Hrs X $ 19.23) | |||||
Total Cost | $ 15,25,346 | $ 15,55,154 | ||||
Solution: C | ||||||
Calculation of total Bid Price | ||||||
Job D - 70 | Job C - 200 | |||||
Manufacturing Cost | $ 15,25,346 | $ 15,55,154 | ||||
Add: 150% of Total Cost | $ 22,88,019 | $ 23,32,731 | ||||
Bid Price | $ 38,13,365 | $ 38,87,885 | ||||
Solution: D | ||||||
Cost of Goods Sold is equal to Manufacturing cost because there is no other inventory at beginning and ending | ||||||
Cost of Goods Sold | ||||||
Job D - 70 | $ 15,25,346 | |||||
Job C - 200 | $ 15,55,154 | |||||
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