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Case 3-62 Cost Flows in a Job-Order Costing System; Schedule of Cost of Goods Manufactured, Automation (LO 3-2, 3-3, 3-4, 3-5, 3-6) 3. Manufacturing

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Case 3-62 Cost Flows in a Job-Order Costing System; Schedule of Cost of Goods Manufactured, Automation (LO 3-2, 3-3, 3-4, 3-5, 3-6) 3. Manufacturing overhead applied in December: $90,000 6. Cost of goods manufactured: $2,968,800 Ex FiberCom, Inc., a manufacturer of fiber optic communications equipment, uses a job-order costing system. Since the production process is page 134 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, N11-013, and N11-015 were completed during December. All completed jobs except Job N11-013 had been turned over to customers by the close of business on December 31. Work-in-Process December Activity Job No. T11-007 N11-013 Balance November 30 Direct Direct Machine Material Labor Hours $ 87,000 $ 1,500 $ 4,500 300 55,000 4,000 12,000 1,000 N11-015 -0- 25,600 26,700 1,400 012-002 -0- 37,900 20,000 2,500 012-003 Total Operating Activity -0- 26,000 16,800 800 $142,000 $95,000 $80,000 6,000 Activity through November 30 December Activity Actual manufacturing overhead incurred: Indirect material $ 125,000 $ 9,000 Indirect labor 345,000 30,000 Utilities. 245,000 22,000 Depreciation 385,000 35,000 Total overhead $1,100,000 $96,000 Other data: Raw-material purchases" $ 965,000 $98,000 Direct-labor costs. $ 845,000 $80,000 Machine hours 73,000 6,000

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