*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 $22,800, direct labor $13,680, and manufacturing overhead $18,240. As of January 1, Job No. 49 had been completed at a cost of

$102,600 and was part of finished goods inventory. There was a $17,100 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 $139,080 and $180,120, respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $102,600 on account.

2. Incurred factory labor costs of $79,800. Of this amount $18,240 related to employer payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirect materials $19,380; indirect labor

$22,800; depreciation expense on equipment $13,680; and various other manufacturing overhead costs on account $18,240.

4. Assigned direct materials and direct labor to jobs as follows.

Job No.		Direct Materials		Direct Labor
50		$11,400		$5,700
51		44,460		28,500
52		34,200		22,800

Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total manufacturing overhead costs of $957,600, direct labor costs of $798,000, and direct labor hours of 22,800 for the year. (Round answer to the nearest whole percent, e.g. 25%.)

Predetermined overhead rate %

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 Direct Materials Direct Labor Manufacturing

Overhead

$ $

Beg. $

Jan.

$ $

$

Cost of completed job

Direct materials $ Direct labor

Manufacturing overhead

Total cost $

Job No. 51

Date Direct Materials Direct Labor Manufacturing

Overhead

$ $

Jan. $

$ $

$

Cost of completed job

Direct materials $ Direct labor

Manufacturing overhead

Total cost $

Job No. 52 Date Direct Materials Direct Labor Manufacturing Overhead

Jan. $ $ $

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

(1)

(2)

(3)

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.)

No. Account Titles and Explanation Debit Credit

(1)

(2)

(3)

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.)

Account Titles and Explanation Debit Credit

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

(1)

(To record sale of jobs) (2)

(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 $