Problem 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 $20,200, direct labor $12,120, and manufacturing overhead $16,160. As of January 1, Job No. 49 had been completed at a cost of $90,900 and was part of finished goods inventory. There was a $15,150 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 $123,220 and $159,580, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $90,900 on account. 2. Incurred factory labor costs of $70,700. Of this amount $16,160 related to employer payroll taxes. 3. Incurred manufacturing overhead costs as follows: indirect materials $17,170; indirect labor $20,200; depreciation expense on equipment $12,120; and various other manufacturing overhead costs on account $16,160 Assigned direct materials and direct labor to jobs as follows. 4. Job No 50 51 52 Direct Materials Direct Labor $10,100 39,390 30,300 $5,050 25,250 20,200 Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total manufacturing overhead costs of $848,400, direct labor costs of $707,000, and direct labor hours of 20,200 for the year. (Round answer to the nearest whole percent, e.g. 25%.) Predetermined overhead rate 120 % Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50. Job No. 50 Date Beg. Direct Materials Direct Labor Manufacturing Overhead Jan. Cost of completed job Direct materials Direct labor Manufacturing overhead Total cost Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit No. Account Titles and Explanation Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry to record the completion of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Account Titles and Explanation Prepare the journal entries to record the sale of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (To record sale of jobs) (To record cost of jobs) What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of? Finished Goods Inventory What is the amount of over- or underapplied overhead? Manufacturing Overhead
