Nama : Irga Ayudias Tantri

Nim : 12030121410011

Case 3-62
FiberCom, Inc., a manufacturer of fiber optic communications equipment, uses a job-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 $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.
Requred :
1. Explain why manufacturers use a predetermined overhead rate to apply manufacturing
overhead to their jobs.
Jawaban :
Jadi kenapa produsen menggunakan tarif overhead yang telah ditentukan untuk
diaplikasikan ke overhead pabrik karena untuk mengalokasikan pekerjaan produksi,
biasanya biaya produksi tidak dapat dilacak secara langsung ke pekerjaan tertentu.
Akibatnya, manajemen akan memiliki informasi biaya pekerjaan yang akurat dan tepat
waktu. Tarif overhead yang ditentukan sebelumnya mudah diterapkan serta dapat
menghindari fluktuasi biaya pekerjaan yang disebabkan oleh perubahan volume produksi
atau biaya overhead sepanjang tahun.

2. How much manufacturing overhead would FiberCom have applied to jobs through
November 30 of the year just completed?
Jawaban :
Manufacturing Overhead in 30 November :
Machine hours 73.000
current annual overhead rate $ 15
Manufaturing Overhead $ 1.095.000

3. How much manufacturing overhead would have been applied to jobs during December of
the year just completed?
Jawaban :
Manufacturing Overhead in December :
Machine hours 6.000
current annual overhead rate $ 15
Manufaturing Overhead $ 90.000

4. Determine the amount by which manufacturing overhead is overapplied or underapplied

as of December 31 of the year just completed.
Jawaban:
Manufacturing Overhead in 31 December :
Actual Overhead ($1.100.000+$96.000) $ 1.196.000
Applied Overhead ($1.095.000 +$90.000) $ (1.185.000)
Underapplied Overhead $ 11.000

5. Determine the balance in the Finished-Goods Inventory account on December 31 of the

year just completed.
Jawaban:
November Balance For Job No. N11-031 $ 55.000
Direct Material $ 4.000
Direct Labor $ 12.000
Overhead ($15 x 1.000/Hours) $ 15.000
Total Finish Good Inventory Dexcember 31 $ 86.000
 6. Prepare 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.)
Jawaban :

FiberCom Company
Schedule of Cost of Goods Manufactured
For the Year Ended December 31

Direct material:
Raw-material inventory, 1/1 $ 105.000
Raw material purchases $ 1.063.000
Raw material available for use $ 1.168.000
Deduct: Indirect material used $ 134.000
Raw-material inventory, 12/31 $ 85.000 $ 219.000
Raw material used $ 949.000
Direct labor $ 925.000
Manufacturing overhead:
Indirect material $ 134.000
Indirect labor $ 375.000
Utilities $ 267.000
Depreciation $ 420.000
Total actual manufacturing overhead $ 1.196.000
Deduct: Underapplied overhead $ 11.000
Overhead applied to work in process $ 1.185.000
Total manufacturing costs $ 3.059.000
Add: Work-in-process inventory, 1/1 $ 60.000
Subtotal $ 3.119.000
Deduct: Work-in-process inventory, 12/31 $ 150.200
Cost of goods manufactured $ 2.968.800

*Supporting calculations for work-in-process, 12/31

D12-002 D12-003 Total
Direct material $ 37.900 $ 26.000 $ 63.900
Direct labor 20.000 16.800 $ 36.800
Applied overhead 37.500 12.000 $ 49.500
Total $ 95.400 $ 54.800 $150.200

Case 4-39
Laredo Leather Company manufactures high-quality leather goods. The company’s profits have
declined during the past nine months. In an attempt to isolate the causes of poor profit performance,
management is investigating the manufacturing operations of each of its products. One of the
company’s main products is leather belts. The belts are produced in a single, continuous process
in the Dallas plant. During the process, leather strips are sewn, punched, and dyed. The belts then
enter a final finishing stage to conclude the process. Labor and overhead are applied continuously
during the manufacturing process. All materials, leather strips, and buckles are introduced at the
beginning of the process. The firm uses the weighted-average method to calculate its unit costs.
The leather belts produced at the Dallas plant are sold wholesale for $9.95 each. Management
wants to compare the current manufacturing costs per unit with the market prices for leather belts.
Top management has asked the Dallas plant controller to submit data on the cost of manufacturing
the leather belts for the month of October. These cost data will be used to determine whether
modifications in the production process should be initiated or whether an increase in the selling
price of the belts is justified. The cost per belt used for planning and control is $5.35. The work-
in-process inventory consisted of 400 partially completed units on October 1. The belts were 25
percent complete as to conversion. The costs included in the inventory on October 1 were as
follows:

During October 7,600 leather strips were placed into production. A total of 7,000 leather belts
were completed. The work-in-process inventory on October 31 consisted of 1,000 belts, which
were 50 percent complete as to conversion. The costs charged to production during October were
as follows:

Requred :
In order to provide cost data regarding the manufacture of leather belts in the Dallas Plant to the
top management of Laredo Leather Company, compute the following amounts for the month of
October.
1. The equivalent units for material and conversion
Jawaban :
Equivalen units of material (7.600 + 400) = 8.000
Equivalen units of conversion (7.000 (1000*50%) = 7.500

2. The cost per equivalent unit of material and conversion

Jawaban:
Cost per unit equivalent of material : $ 3.30
Cost per unit equivalent of Conversion : $ 2.80
Total Cost $ 6.10

3. The assignment of production costs to the October 31 work-in-process inventory and to

goods transferred out.
 Jawaban :

Work-in-process inventory 31 Oktober :

Direct Material
Number of Equivalen units of material 1.000 x $3.30 $ 3.300
x Cost per unit equivalent of material
Conversion
Number of Equivalen units of conversion 500 x $2.80 $ 1.400
x Cost per unit equivalent of conversion
Total Work-in-process inventory 31 Oktober $ 4.700

Cost Of Good Sold Completed and transfer out :

Number of Unit transfer out 7.000 x $6.10 $ 42.700
X Total Cost Equivalen of unit

4. The weighted-average unit cost of leather belts completed and transferred to finished
goods. Comment on the company’s cost per belt used for planning and control
Jawaban :
Weighted-Average Method

Equivalent Unit
Percentage
Physical of Direct
Units Completion Material Conversion
Work In Process, October 1 400 25%
Units started during October 7.600
Total Unit to account 8.000

Units completed and tranferred out

during October 7.000 100% 7.000 7.000
Work In Process, October 31 1.000 50% 1.000 500
Total Unit to account 8.000
Total Equivalent Unit 8.000 7.500

Direct
Material Conversion Total
Work In Process, October 1 $ 1.250 $ 300 $ 1.550
Cost incurred during October $ 25.150 $ 20.700 $ 45.850
Total Cost to account $ 26.400 $ 21.000 $ 47.400
Equivalen Unit 8.000 7.500
Cost per Uquivalen unit $ 3,30 $ 2,80 $ 6,10

Cost Of Good Sold Completed and transfer out : $ 42.700

Work-in-process inventory 31 Oktober : 4.700
Total Cost accounted $ 47.400
5. Laredo Leather Company’s production manager, Jack Murray, has been under pressure
from the company president to reduce the cost of conversion. In spite of several attempts
to reduce conversion costs, they have remained more or less constant. Now Murray is faced
with an upcoming meeting with the company president, at which he will have to explain
why he has failed to reduce conversion costs. Murray has approached his friend, Jeff Daley,
who is the corporate controller, with the following request: “Jeff, I’m under pressure to
reduce costs in the production process. There is no way to reduce material cost, so I’ve got
to get the conversion costs down. If I can show just a little progress in next week’s meeting
with the president, then I can buy a little time to try some other cost-cutting measures I’ve
been considering. I want you to do me a favor. If we raise the estimate of the percentage of
completion of October’s inventory to 60 percent, that will increase the number of
equivalent units. Then the unit conversion cost will be a little lower.” By how much would
Murray’s suggested manipulation lower the unit conversion cost? What should Daley do?
Discuss this situation, citing specific ethical standards for managerial accountants.
Jawaban :
Upaya Jack Murray untuk mengurangi biaya konversi dengan menaikan persentasi
inventory dibulan oktober sebesar 60% maka akan ada 7.600 unit equivalent.
Direct
Material Conversion Total
Work In Process, October 1 $ 1.250 $ 300 $ 1.550
Cost incurred during October $ 25.150 $ 20.700 $ 45.850
Total Cost to account $ 26.400 $ 21.000 $ 47.400
Equivalen Unit (Increase 60%) 8.000 7.600
Cost per Uquivalen unit $ 3,30 $ 2,76 $ 6,06

Dengan demikian, biaya unit turun dari $6,10 menjadi $6,06

Seharusnya yang dilakukan Delay sebagai controller yaitu menolak permintaan Jack untuk
mengubah persentasi persediaan. Karena sebagai seorang manager harus memiliki etika
dan harus mengikuti standar yang relevan dan memberikan informasi yang adil, akurat dan
jelas.