Opticom, 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$30 per machine hour is based on budgeted manufacturing overhead cost of $2,400,000 and a budgeted activity level of 80,000 machine hours (the company’s estimated practical capacity). Operations for the year have been completed, and all of the accounting entries have been made for the year except the application of manufacturing overhead to the jobs worked on during December, the transfer of cost from Work in Process to Finished Good for the Jobs, completed in December, and the transfer of cost from Finished Goods to cost of Goods Sold for the jobs that have been sold during December. Summarized data as of November 30 and for the month of December are presented in the following table. Jobs T11-007, N11-013, N11-015 were completed during December. All completed job except N11-013 had been turned over to customers by the close of business on December 31. Work in ProcessDecember ActivityJob NoBalance Nov 30Direct MaterialDirect LaborMachine HoursT11-007$ 174,000$ 3,000$9,000300N11-013110,0008,00024,0001,000N11-015051,20053,4001,400D12-002075,80040,0002,500D12-003052,00033,600800Total$284,000$190,000$160,0006,000 Operating ActivityActivity Through November 30December ActivityActual manufacturing overhead incurred: Indirect material$ 250,000$ 18,000Indirect labor690,00060,000Utilities490,00044,000 Depreciation770,00070,000Total Overhead$2,200,000$ 192,000 Other Data: Raw Material purchases*$1,930,000$ 196,000Direct-labor cost$1,690,000$ 160,000Machine hours73,0006,000 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 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: Explain why manufacturers uses a predetermined overhead rate to apply manufacturing overhead to their jobsHow much manufacturing overhead would Opticom have applied to jobs through November 30 of the year completed How much manufacturing overhead would have been applied to jobs during December of the year completed Determine the amount by which manufacturing overhead is overapplied or underapplied as of December of the year completedDetermine the balance in the Finished-Goods Inventory account on December 31 of the year just completed.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)How much is the Cost of Goods Sold for the year just completed?

Name: Opticom, Inc. a manufacturer of fiber optic communications equipment,
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Description: Opticom, 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 rat

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Opticom, 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

$30 per machine hour is based on budgeted manufacturing overhead cost of $2,400,000 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.

Work in Process	December Activity
Job No	Balance Nov 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 cost	$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

Account Balances at Beginning of Year January 1

Raw-material Inventory * $ 210,000

Work-in-process inventory 120,000

Finished-goods inventory 250,000

Required:

Explain why manufacturers uses a predetermined overhead rate to apply manufacturing overhead to their jobs
How much manufacturing overhead would Opticom have applied to jobs through

November 30 of the year completed

How much manufacturing overhead would have been applied to jobs during December of the year completed

Determine the amount by which manufacturing overhead is overapplied or underapplied as of December of the year completed
Determine the balance in the Finished-Goods Inventory account on December 31 of the year just completed.
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)
How much is the Cost of Goods Sold for the year just completed?

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