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: Molding Fabrication Total Machine-hours 25,000 35,000 60,000 Fixed manufacturing overhead costs $ 750,000 $ 290,000 $ 1,040,000 Variable manufacturing overhead cost per machine-hour $ 5.30 $ 5.30 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 $ 376,000 $ 326,000 $ 702,000 Direct labor cost $ 210,000 $ 180,000 $ 390,000 Machine-hours 17,000 8,000 25,000 Job C-200: Molding Fabrication Total Direct materials cost $ 300,000 $ 260,000 $ 560,000 Direct labor cost $ 150,000 $ 270,000 $ 420,000 Machine-hours 8,000 27,000 35,000 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 120% 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?
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.
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Delph Company uses a
| Molding | Fabrication | Total | ||||
| Machine-hours | 25,000 | 35,000 | 60,000 | |||
| Fixed manufacturing |
$ | 750,000 | $ | 290,000 | $ | 1,040,000 |
| Variable manufacturing overhead cost per machine-hour | $ | 5.30 | $ | 5.30 | ||
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 | $ | 376,000 | $ | 326,000 | $ | 702,000 |
| Direct labor cost | $ | 210,000 | $ | 180,000 | $ | 390,000 |
| Machine-hours | 17,000 | 8,000 | 25,000 | |||
| Job C-200: | Molding | Fabrication | Total | |||
| Direct materials cost | $ | 300,000 | $ | 260,000 | $ | 560,000 |
| Direct labor cost | $ | 150,000 | $ | 270,000 | $ | 420,000 |
| Machine-hours | 8,000 | 27,000 | 35,000 | |||
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 120% 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?
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