Question

Required Information [The following information applies to the questions displayed below.) 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 Tixed manufacturing overhead cont Variable manufacturing overhead cost per machine-hour Holding Fabrication Total 20,000 30,000 50,000 $ 700,000 $210,000 $910,000 3.00 $ 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-701 Molding Yabention total Direct materials cost $375,000 325,000 6700,000 $ 200,000 160,000 $360,000 Machine-hours 14,000 6.000 20,000 Direct labor coat Job C-2007 Direct materiale cont Direct labor cost Machine-hours Holding Tabration Total $ 300,000 250,000 $350,000 $ 175,000 $225,000 $400,000 6,000 24,000 30,000 Delph had no underapplied or overapplied manufacturing overhead during the year. 2. Assume Delph chooses to combine its departmental rates into 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. I Delph establishes bid prices that are 150% of total manufacturing costs, what bid prices would it have established for Job D-70 and Job C-2007 d. What is Delph's cost of goods sold for the year?

Answer 1

A) Calculation of plantwide predetermined overhead rate

The first step is to calculate the estimated total overhead costs in Molding and Fabrication:

Molding: Using the equation Y = a + bX, the estimated total manufacturing overhead cost would be calculated as follows:

Y = $700,000+($3 MH)(20,000 MHs)

Y = $ 760,000

Fabrication: Using the equation Y = a + bX, the estimated total manufacturing overhead cost would be calculated as follows:

Y = $ 210,000+ ($1 MH)(30000 MHs)

Y= $240,000

The second step is to combine the estimated manufacturing overhead costs in Molding and Fabrication ($760,000 + $240,000 = $10,00,000) to enable calculating the predetermined overhead rate as follows:

Estimated total manufacturing overhead (a) $ 10,00,000
Estimated total machine-hours (b) 50,000 MHs
Predetermined overhead rate (a) ÷ (b) $ 20 per MH

B) Total manufacturing cost assigned to Jobs D-70 and C-200:

                                                         D-70                                C-200
Direct materials                               $ 700,000                        $ 550,000
Direct labor                                      $ 360,000                        $400,000
Manufacturing overhead applied    $400,000                          $600,000

                                           ($20 per MH × 20,000 MHs) ($20 per MH × 30,000 MHs)

Total manufacturing cost               $ 14,60,000                          $ 15,50,000

C) Bid prices for Jobs D-70 and C-200:

                                                                          D-70                           C-200
Total manufacturing cost (a)                          $ 14,60,000            $ 15,50,000
Markup percentage     (b)                                    150 %                     150 %
Bid price (a) × (b)                                            $ 21,90,000            $ 23,25,000

D) Because the company has no beginning or ending inventories and only Jobs D-70 and C-200 were started, completed, and sold during the year, the cost of goods sold is equal to the sum of the manufacturing costs assigned to both jobs of $30,10,000

(= $14,60,000 + $15,50,000).