Delph Company uses a joborder costing system and has two man

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.

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 140% 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?

	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

Solution

Solution:

Part 2(a) – Departmental predetermined overhead rates

Molding Department

Fabrication Department

Estimated Total Fixed Manufacturing Overhead Costs (A)

$740,000

$220,000

Estimated Allocation Base ( Estimated Machine Hours) (B)

22,000

32,000

Departmental Predetermined Fixed Overhead Rate per machine hour (A / B)

$33.64

$6.88

Plus: Variable manufacturing overhead cost per machine-hour

$5.50

$5.50

Departmental Predetermined Overhead Rate per Machine Hour

(Fixed Rate + Variable Rate)

$39.14

(33.64 + 5.50)

$12.38

(6.88 + 5.50)

Part 2(b) --- Total manufacturing cost assigned to Job D-70 and Job C-200

Job D-70:

Molding

Fabrication

Total

Direct materials cost

$374,000

$326,000

$700,000

Direct labor cost

$240,000

$160,000

$400,000

Applied Manufacturing Overhead Costs (Refer Note 1)

$626,240

$74,280

$700,520

Total Manufacturing Costs Assigned

$1,240,240

$560,280

$1,800,520

Job C-200

Molding

Fabrication

Total

Direct materials cost

$290,000

$270,000

$560,000

Direct labor cost

$150,000

$300,000

$450,000

Applied Manufacturing Overhead Costs (Refer Note 1)

$234,840

$321,880

$556,720

Total Manufacturing Costs Assigned

$674,840

$891,880

$1,566,720

Note 1 --- Applied Manufacturing Overhead Costs to each Job

Job D-70

Molding

Fabrication

Machine Hours worked (A)

16,000

6,000

Overhead Rate per Machine Hour (B)

$39.14

$12.38

Total Applied Manufacturing Overhead Costs (A*B)

$626,240

$74,280

Job C-200

Molding

Fabrication

Machine Hours worked (A)

6,000

26,000

Overhead Rate per Machine Hour (B)

$39.14

$12.38

Total Applied Manufacturing Overhead Costs (A*B)

$234,840

$321,880

Part 2(c ) --- Calculation of Bid Price for each job

Job D-70

Job C-200

Total Manufacturing Costs

$1,800,520

$1,566,720

Bid Price (140% of Manufacturing Costs)

$2,520,728

(1,800,520 * 140%)

$2,193,408

(1,566,720 * 140%)

Part 2(d) -- Delph’s cost of goods sold for the year

Job D-70

Job C-200

Total

Total Manufacturing Costs

$1,800,520

$1,566,720

$3,367,240

Deplh’s Total Cost of Goods Sold for the year = total manufacturing costs of Job D-70 and C-200 = $3,367,240

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

	Molding Department	Fabrication Department
Estimated Total Fixed Manufacturing Overhead Costs (A)	$740,000	$220,000
Estimated Allocation Base ( Estimated Machine Hours) (B)	22,000	32,000
Departmental Predetermined Fixed Overhead Rate per machine hour (A / B)	$33.64	$6.88
Plus: Variable manufacturing overhead cost per machine-hour	$5.50	$5.50
Departmental Predetermined Overhead Rate per Machine Hour (Fixed Rate + Variable Rate)	$39.14 (33.64 + 5.50)	$12.38 (6.88 + 5.50)