Problem 2-1A (Video) Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $23,500, direct labor $14,160, and manufacturing overhead $18,880. As of January 1, Job 49 had been completed at a cost of $106,200 and was part of finished goods inventory. There was a $17,700 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 $143,960 and $186,440, respectively. The following additional events occurred during the month. 1. 2. Purchased additional raw materials of $106,200 on account. Incurred factory labor costs of $82,600. Of this amount $18,880 related to employer payroll taxes. Incurred manufacturing overhead costs as follows: indirect materials $20,060; indirect labor $23,600; depreciation expense on equipment $14,160; and various other manufacturing overhead costs on account $18,880. Assigned direct materials and direct labor to jobs as follows. 3. 4. Job No. 50 Direct Materials $11,800 46,020 35,400 Direct Labor $5,900 29,500 23,600 51 52 Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $991,200, direct labor costs of $826,000, and direct labor hours of 23,600 for the year. Predetermined overhead rate % Prepare the journal entries to record (1) the purchase of raw materials, (2) the factory labor costs incurred, and (3) 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 (1) direct materials, (2) direct labor, and (3) 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) Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job 50. Post all costs to the job cost sheets as necessary. 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 ta Direct labor Manufacturing overhead Total cost $ Job No. 52 Date Direct Materials Direct Labor Manufacturing Overhead Jan. $ $ 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