Opticom, Inc. a manufacturer of fiber optic communications equipment, use a job-order costing system. Since the production process is heavily automated, manufacturing overhead is applied on the basis of machine hour using a predetermined overhead rate. The current annual rate of $30 per machine hour is based on budgeted manufacturing overhead cost of $2,400,000 and a budgeted activity level of 80,000 machine hours (the company’s estimated practical capacity). Operations for the year have been completed, and all of the accounting entries have been made for the year except the application of manufacturing overhead to the jobs worked on during December, the transfer of cost from Work in Process to Finished Good for the Jobs, completed in December, and the transfer of cost from Finished Goods to cost of Goods Sold for the jobs that have been sold during December. Summarized data as of November 30 and for the month of December are presented in the following table. Jobs T11-007, N11-013, N11-015 were completed during December. All completed job except N11-013 had been turned over to customers by the close of business on December 31.     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     Depreciation 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   amount   by   which   manufacturing   overhead   is   overapplied   or underapplied as of December of the year completed 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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Opticom, Inc. a manufacturer of fiber optic communications equipment, use a job-order costing system. Since the production process is heavily automated, manufacturing overhead is applied on the basis of machine hour using a predetermined overhead rate. The current annual rate of

$30 per machine hour is based on budgeted manufacturing overhead cost of $2,400,000 and a budgeted activity level of 80,000 machine hours (the company’s estimated practical capacity). Operations for the year have been completed, and all of the accounting entries have been made for the year except the application of manufacturing overhead to the jobs worked on during December, the transfer of cost from Work in Process to Finished Good for the Jobs, completed in December, and the transfer of cost from Finished Goods to cost of Goods Sold for the jobs that have been sold during December. Summarized data as of November 30 and for the month of December are presented in the following table. Jobs T11-007, N11-013, N11-015 were completed during December. All completed job except N11-013 had been turned over to customers by the close of business on December 31.

 

 

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

 

 

Depreciation

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:

  1. Determine  the   amount   by   which   manufacturing   overhead   is   overapplied   or underapplied as of December of the year completed
  2. Determine the balance in the Finished-Goods Inventory account on December 31 of the year just completed.
  3. 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)
  4. How much is the Cost of Goods Sold for the year just completed? 
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