Delph Company uses a job- order costing system and has two manufacturing departments- Molding and Fabrication. The company provided the 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- 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 these two jobs:
Job D- 7 Molding Fabrication Total
Direct Materials $375,000 $325,000 $700,000
Direct Labor Cost $200,000 $160,000 $350,000
Machine-hours 14,000 6,000 20,000
Job C- 200 Molding Fabrication Total
Direct Materials $300,000 $250,000 $550,000
Direct Labor Cost $175.000 $225,000 $400,000
Machine- hours 6,000 24,000 30,000
Delph had no overapplied or underapplied overhead during the year.
Required
1) Assume Dulph uses a overhead rate based on machine- hours
a. Compute the predetermined plantwide overhead rate.
b. Compute the total manufacturing costs assigned to job D-70 and job C- 200
c. If Dalph establishes bid prices that are 150% of total manufacturing costs, what bid price would it have established for job D- 70 and job C- 200
d. What is Delph’s Cost of Goods Sold for the yeat?
2) Assume Delph uses departmental overhead rates based on machine hours
a. Compute the predetermined departmental overhead rates.
b. Compute the total manufacturing costs assigned to job D- 70 and job C-200
c. If Delph establishes bid prices that are 150%of total manufacturing costs, what bid price would it have established for job D-70 and job C-200
d, What is Delph’s COGS for the year
What managerial insights are revealed by the computations that you performed in this problem? (hint: Do the COGS amounts that you computed in requirements 1 and 2 differ from one another? Do the bid prices that you computed in requirements 1 and 2 differ from one another? Why?)
