Determine the balance in the Finished-Goods Inventory account on December 31 of the year just completed. Prepare a Schedule of Cost of Goods Manufactured for Opticom, Inc. for the year just completed. (Hint: In Computing the cost of direct material used, remember that Opticom includes both direct and indirect material in its Raw-Material Inventory account)
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.
Opticom, Inc. a manufacturer of fiber optic communications equipment, use a
$30 per machine hour is based on budgeted
|
Work in Process |
December Activity |
|||
|
Job No |
Balance Nov 30 |
Direct
Material |
Direct Labor |
Machine
Hours |
|
T11-007 |
$ 174,000 |
$ 3,000 |
$9,000 |
300 |
|
N11-013 |
110,000 |
8,000 |
24,000 |
1,000 |
|
N11-015 |
0 |
51,200 |
53,400 |
1,400 |
|
D12-002 |
0 |
75,800 |
40,000 |
2,500 |
|
D12-003 |
0 |
52,000 |
33,600 |
800 |
|
Total |
$284,000 |
$190,000 |
$160,000 |
6,000 |
|
Operating Activity |
Activity Through
November 30 |
December Activity |
|
Actual manufacturing overhead incurred: |
|
|
|
Indirect material |
$ 250,000 |
$ 18,000 |
|
Indirect labor |
690,000 |
60,000 |
|
Utilities |
490,000 |
44,000 |
|
|
770,000 |
70,000 |
|
Total Overhead |
$2,200,000 |
$ 192,000 |
|
|
|
|
|
Other Data: |
|
|
|
Raw Material purchases* |
$1,930,000 |
$ 196,000 |
|
Direct-labor cost |
$1,690,000 |
$ 160,000 |
|
Machine hours |
73,000 |
6,000 |
Account Balances at Beginning of Year January 1
Raw-material Inventory * $ 210,000
Work-in-process inventory 120,000
Finished-goods inventory 250,000
*Raw material purchases and raw-material inventory consist of both direct and indirect materials. The balance of the raw material inventory account as of December 31 of the year just completed is $170,000
Account Balances at Beginning of Year January 1
Raw-material Inventory * $ 210,000
Work-in-process inventory 120,000
Finished-goods inventory 250,000
*Raw material purchases and raw-material inventory consist of both direct and indirect materials. The balance of the raw material inventory account as of December 31 of the year just completed is $170,000
Required:
- Determine the balance in the Finished-Goods Inventory account on December 31 of the year just completed.
- Prepare a Schedule of Cost of Goods Manufactured for Opticom, Inc. for the year just completed. (Hint: In Computing the cost of direct material used, remember that Opticom includes both direct and indirect material in its Raw-Material Inventory account)
- How much is the Cost of Goods Sold for the year just completed?
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