Question
Fibercom, 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
Fibercom, 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 $15 per machine hour is
based on budgeted manufacturing overhead cost 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 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.
(in image: table)
Account Balances at Beginning of Year(January 1)
Raw-material Inventory * $ 105,000
Work-in-process inventory 60,000
Finished-goods inventory 125,000
*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 $85,000
Required:
1. Determine the balance in the Finished-Goods Inventory account on December 31 of the year just
completed.
2. Determine 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)
3. How much is the Cost of Goods Sold
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