Question

Smithson 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 20,000 30,000 50,000
Fixed manufacturing
overhead costs $800,000 $300,000 $1,100,000
Variable manufacturing
overhead per machine-hour $5.00 $5.00
During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-75 and Job C-100. It provided the following information related to those two jobs:
Job D-75: Molding Fabrication Total
Direct materials cost $375,000 $325,000 $700,000
Direct labor cost $200,000 $160,000 $360,000
Machine-hours 15,000 5,000 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
Assume Delph uses a plantwide overhead rate based on machine-hours.
Required:
1-A. Compute the predetermined plantwide overhead rate.
1-B. Compute the total manufacturing costs assigned to Job D-70 and Job C-200.
1-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?
1-D. What is Delph's cost of goods sold for the year?
Assume Delph uses departmental overhead rates based on machine-hours.
2-A. Compute the predetermined departmental overhead rates.
2-B. Compute the total manufacturing costs assigned to Job D-70 and Job C-200.
2-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?
2-D. What is Delph's cost of goods sold for the year?

Answer 1

Instructions are below.

Step-by-step explanation:

1)

a) First, we need to calculate the total estimated overhead:

Total overhead= 1,100,000 + (5*50,000)= 1,350,000

Now, we can determine the overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 1,350,000/50,000

Predetermined manufacturing overhead rate= $27 per machine hour

b)

Job D-75:

Total cost= direct material + direct labor + allocated overhead

Total cost= 700,000 + 360,000 + 27*20,000

Total cost= $1,600,000

Job C-200:

Total cost= 550,000 + 400,000 + 27*30,000

Total cost= $1,760,000

c) Selling price= 150% of manufacturing costs

Job D-75= 1,600,000*1.5= $2,400,000

Job C-200= 1,760,000*1.5= $2,640,000

d) COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 0 + (1,600,000 + 1,760,000) - 0

COGS= $3,360,000

2)

a)

Molding= (800,000/20,000) + 5= $45 per machine hour

Assembly= (300,000/30,000) + 5= $15 per machine hour

b)

Job D-75:

Total cost= 700,000 + 360,000 + 45*20,000

Total cost= $$1,960,000

Job C-200:

Total cost= 550,000 + 400,000 + 15*30,000

Total cost= $1,400,000

c)

Job D-75= 1,960,000*1.5= $2,940,000

Job C-200= 1,400,000*1.5= $2,100,000

d) COGS= 0 + (1,960,000 + 1,400,000) + 0

COGS= $3,360,000