Delph Company uses a job-order costing system and has two manufacturing departme

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:

  

  

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:

  

  

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 140% 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?

Molding Fabrication Total Machine-hours 22,000 32,000 54,000 Fixed manufacturing overhead costs $ 740,000 $ 220,000 $ 960,000 Variable manufacturing overhead cost per machine-hour $ 5.50 $ 5.50

Explanation / Answer

Solution 1a:

Predetermined overhead rate = Total overhead /Total machine hours = ($960,000 + 54000*$5.50) /54000

= $23.28 per machine hour

Solution 1b:

Solution 1c:

Solution 1d:

Delph's cost of goods sold for the year = Cost of job D70 and C200 = $1,612,160 + $1,754,960 = $3,367,120

Compuatation of manufacturing cost assigned to Job Particulars Job D70 Job C200 Direct Material $700,000.00 $560,000.00 Direct Labor $400,000.00 $450,000.00 Manufacturing overhead
D 70 - 22000*$23.28
C200 - 32000*$23.28 $512,160.00 $744,960.00 Total Manufacturing cost $1,612,160.00 $1,754,960.00

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