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		29,000		39,000		68,000
Fixed manufacturing overhead costs	$	730,000	$	270,000	$	1,000,000
Variable manufacturing overhead cost per machine-hour	$	6.10	$	6.10

  

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	$	373,000	$	323,000	$	696,000
Direct labor cost	$	230,000	$	160,000	$	390,000
Machine-hours		19,000		10,000		29,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	230,000	$	300,000	$	530,000
Direct labor cost	$	120,000	$	270,000	$	390,000
Machine-hours		10,000		29,000		39,000

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 120% 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
	Predetermined overhead rate
Molding Department	31.27	=6.1+(730000/29000)
Fabrication Department	13.02	=6.1+(270000/39000)
b
	Job D-70	Job C-200
Direct materials cost	696000	530000
Direct labor cost	390000	390000
Overhead:
Molding Department	594130	312700
Fabrication Department	130200	377580
Total manufacturing cost	1810330	1610280
c
	Job D-70	Job C-200
Total manufacturing cost	1810330	1610280
Add: Markup @20%	362066	322056
Bid prices	2172396	1932336
d
Total manufacturing cost Job D-70	1810330
Total manufacturing cost Job C-200	1610280
Cost of goods sold	3420610
Workings:
Overhead applied:
Job D-70
Molding Department = 19000*31.27 = 594130
Fabrication Department = 10000*13.02= 130200
Job C-200
Molding Department = 10000*31.27 = 312700
Fabrication Department = 29000*13.02=377580