Delph Company uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 55,000 machine-hours would be required for the period’s estimated level of production. It also estimated $980,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per machine-hour. Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine hours. The company gathered the following information to enable calculating departmental overhead rates: Molding Fabrication Total Machine-hours 24,000 31,000 55,000 Fixed manufacturing overhead cost 760,000 220,000 980,000 Variable manufacturing overhead cost per machine-hour $4.00 $1.50 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 15,000 9,000 24,000 Job C-200 Molding Fabrication Total Direct materials cost $300,000 $220,000 $520,000 Direct labor cost $160,000 $260,000 $420,000 Machine-hours 9,000 22,000 31,000 Delph had no underapplied or overapplied manufacturing overhead during the year. 1. Assume Delph uses plantwide predetermined overhead rates 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 costs, what bid prices would it have established for Job D-70 and Job C-200?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Delph Company uses a
Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine hours. The company gathered the following information to enable calculating departmental overhead rates:
| Molding | Fabrication | Total | |
| Machine-hours | 24,000 | 31,000 | 55,000 |
| Fixed manufacturing overhead cost | 760,000 | 220,000 | 980,000 |
| Variable manufacturing overhead cost per machine-hour | $4.00 | $1.50 |
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 | 15,000 | 9,000 | 24,000 |
| Job C-200 | Molding | Fabrication | Total |
|---|---|---|---|
| Direct materials cost | $300,000 | $220,000 | $520,000 |
| Direct labor cost | $160,000 | $260,000 | $420,000 |
| Machine-hours | 9,000 | 22,000 | 31,000 |
Delph had no underapplied or overapplied manufacturing overhead during the year.
1. Assume Delph uses plantwide predetermined overhead rates 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
d. What is Delph’s cost of goods sold for the year?
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