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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

image text in transcribed
Work-In-Process December Activity Job No. Balance November 30 Direct Material Direct Labor Machine Hours T11-007 $ 87,000 $ 1,500 $ 4,500 300 N11-013 55,000 4,000 12,000 1,000 N11-015 -0- 25,600 26,700 1,400 D12-002 -0- 37,900 20,000 2,500 D12-003 -0- 26,000 16,800 800 Total $142,000 $95,000 S80,000 6,000 Operating Activity 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* 5 965,000 698,000 Direct-labor costs $ 845,000 580,000 Machine hours 73,000 6,000

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