Opticom, Inc. a manufacturer of fiber optic communications equipment, uses a j ob-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 $30 per machine hour is based on budgeted manufacturing overhead costs of $2,400,000 and a budgeted activity level of 80,000 machine hours (the companys estimated practical capacity). Operations for the year have been completed,

Work-in-Process December Activity Job No. Balance November 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 costs .................................................... $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. Required: 1. Explain why manufacturers use a predetermined overhead rate to apply manufacturing overhead to their jobs. 2. How much manufacturing overhead would Opticom 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 overapplied or underapplied as of December 31 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 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.)