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Delph Company uses a job-order costing system and has two manufacturing departmentsMolding and Fabrication
|
Delph Company uses a job-order costing system and has two manufacturing departmentsMolding and Fabrication. The company provided the following estimates at the beginning of the year: |
| Molding | Fabrication | Total | ||||
| Machine-hours | 20,000 | 30,000 | 50,000 | |||
| Fixed manufacturing overhead costs | $ | 700,000 | $ | 210,000 | $ 910,000 | |
| Variable manufacturing overhead per machine-hour | $ | 3.00 | $ | 3.00 | ||
|
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 | $ | 375,000 | $ | 325,000 | $ | 700,000 |
| Direct labor cost | $ | 200,000 | $ | 160,000 | $ | 360,000 |
| Machine-hours | 14,000 | 6,000 | 20,000 | |||
| Job C-200: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 300,000 | $ | 250,000 | $ | 550,000 |
| Direct labor cost | $ | 175,000 | $ | 225,000 | $ | 400,000 |
| Machine-hours | 6,000 | 24,000 | 30,000 | |||
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?
Expert Solution
Answer:
a.
| Computation of Plantwide predetermined Overhead Rate | |
| Fixed Manufacturing Overhead costs | $9,10,000 |
| Variable Manufacturing Overhead cost [(20000*$3) + (30000*$1)] |
$90,000 |
| Total Estimated Overhead costs (a) | $10,00,000 |
| /Total Estimated Machine Hours (b) | 50000 |
| Plantwide Overhead Rate (a/b) | $20.00 |
b.
| Computation of Total Manufacturing Costs | ||
| Job D-70 | Job C-200 | |
| Direct Material Costs | $7,00,000 | $5,50,000 |
| Direct Labor Costs | $3,60,000 | $4,00,000 |
| Manufacturing Overhead costs (Total Machine Hours*$20.00) |
$4,00,000 | $6,00,000 |
| Total Manufacturing Costs | $14,60,000 | $15,50,000 |
c.
| Computation of Bid Prices | ||
| Job D-70 | Job C-200 | |
| Total Manufacturing Costs | $14,60,000 | $15,50,000 |
| Bid price (Total Manufacturing Costs*150%) | $21,90,000 | $23,25,000 |
d.
| Computation of Delph's Cost of Goods sold | |
| Total Manufacturing Costs of Job D-70 | $14,60,000 |
| Total Manufacturing Costs of Job C-200 | $15,50,000 |
| Total Cost of Goods sold | $30,10,000 |
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