FiberCom, Inc., a manufacturer of fiber optic communications equipment, uses a job order costing system. Since the production process is heavily automated, manufacturing overhead is applied on the basis of machine hours using a predetermined overhead rate. The current annual rate of $15 per machine hour is based on budgeted manufacturing overhead costs of $1,200,000 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 costs from Work in Process to Finished Goods for the jobs completed in December, and the transfer of costs 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, N 11-013, and N 11-015 were completed during December. All completed jobs except Job N 11-013 had been turned over to customers by the close of business on December 31.

Required:
1. Explain why manufacturers use a predetermined overhead rate to apply manufacturing overhead to their jobs.
2. How much manufacturing overhead would FiberCom have applied to jobs through November 30 of the year just completed?
3. How much manufacturing overhead would have been applied to jobs during December of the year just completed?
4. Determine the amount by which manufacturing overhead is over applied or under applied as of December31 of the year just completed.
5. Determine the balance in the Finished-Goods Inventory account on December 31 of the year just completed.

6. Prepare a Schedule of Cost of Goods Manufactured for FiberCom, Inc. for the year just completed. (Hint: In computing the cost of direct material used, remember that FiberCom includes both direct and indirect material in its Raw-Material Inventory account.)

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Work-in-Process December Activity Direct Balance November 30 Material Direct Labor Machine Job No. 11-00787,000 1,500 N11-01355,000 N11-015 D12-002 D12-003 Hours 300 1,000 20,000.2,500 16,800800 6,000 150021.400 4,000 25,600 37,900 4,500 12,000... 26,700 0- 30000. 1 olalS 42,000 $95,000 $80,000 ー Operating Activity Activity through November 30 December Activity Actual manufacturing overhead incurred: Indirect material Indirect labor Utilities Deprec ation Total overhead S125,000.. 9,000 30,000 22,000 35,000 $96,000 345,000t 245,000 385,000 $1,100,000 Other date Raw-material purchases Direct-labor costs. Machine hours 965,000 $845,000 $98,000 $80,000 6,000 73,000 Account Balances at Beginning of Year Raw-material inventory" Work-in-process inventory Finished-goods inventory Raw-material purchases and raw-material inventory consist of both direct and indirect materials. The balance of the Raw Material Inventory account as ef December 31 of the year just completed is $85,000. January 1 $105,000 60,000 125,000