Exercise 2-1a

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2017, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $20, 600, direct labor $12, 360, and manufacturing overhead $16, 480. As of January 1, Job No. 49 had been completed at a cost of $92, 700 and was part of finished goods inventory. There was a $15, 450 balance in the Raw Materials Inventory account. During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $125, 660 and $162, 740, respectively. The following additional events occurred during the month. (a) Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total manufacturing overhead costs of $865, 200, direct labor costs of $721,000, and direct labor hours of 20, 600 for the year