Question

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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		35,000		56,000
Fixed manufacturing overhead costs	$	800,000	$	220,000	$	1,020,000
Variable manufacturing overhead cost per machine-hour	$	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:	Molding		Fabrication		Total
Direct materials cost	$	370,000	$	320,000	$	690,000
Direct labor cost	$	220,000	$	160,000	$	380,000
Machine-hours		14,000		7,000		21,000

  

Job C-200:	Molding		Fabrication		Total
Direct materials cost	$	220,000	$	280,000	$	500,000
Direct labor cost	$	120,000	$	280,000	$	400,000
Machine-hours		7,000		28,000		35,000

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?

Answer 1

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 =	$                   1,020,000	"/"	56,000	"="	$                     18.21
Solution: B
	CALCULATION OF TOTAL MANUFACTURING COST ASSIGNED TO JOB D-70 AND JOB C -200
		Job D - 70		Job C - 200
	Direct Materials	$                       690,000		$                 500,000
	Direct Labor Cost	$                       380,000		$                 400,000
	Variable Manufacturing overhead	$                         63,000		$                    56,000
		(14,000X$ 4+7000X$ 1.00)	(7,000X$ 4+28000X$ 1.00)
	Fixed Manufacturing overhead	$                       382,500		$                 637,500
		(21,000 Hrs X $ 18.21)		(35,000 Hrs X $ 18.21)
	Total Cost	$                   1,515,500		$              1,593,500
Solution: C
	Calculation of total Bid Price
		Job D - 70		Job C - 200
	Manufacturing Cost	$                   1,515,500		$              1,593,500
	Add: 150% of Total Cost	$                   2,273,250		$              2,390,250
	Bid Price	$                   3,788,750		$              3,983,750
Solution: D
	Cost of Goods Sold is equal to Manufacturing cost because there is no other inventory at beginning and ending
	It means cost of good manufactures = Cost of Goods Sold
		Cost of Goods Sold
	Job D - 70	$                   1,515,500
	Job C - 200	$                   1,593,500