Problem 151A Lott Company uses a job order cost system and a

Problem 15-1A 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 $23,400, direct labor $14,040, and manufacturing overhead S18,720. As of January 1, Job No. 49 had been completed at a cost of S105,300 and was part of finished goods inventory. There was a $17,550 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 $142,740 and $184,860, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $105,300 on account. 2. 3. 4. Incurred factory labor costs of $81,900. Of this amount S18,720 related to employer payroll taxes. Incurred manufacturing overhead costs as follows: indirect materials $19,890; indirect labor S23,400; depreciation expense on equipment $14,040; and various other manufacturing overhead costs on account $18,720. Assigned direct materials and direct labor to jobs as follows. Job No. 50 51 52 Direct Materials Dit Labor $11,700 45,630 35,100 S5,850 29,250 23,400 Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total manufacturing overhead costs of $982,800, direct labor costs of S819,000, and direct labor hours of 23,400 for the year. (Round answer to the nearest whole percent, e.g. 25%.) Predetermined overhead rate SHOW LIST OF ACCOUNTS Open job cost sheets tor Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50 Job No. 50 Date Beg. Jan. Direct Materials Direct Labor Manufacturing Overhead

Solution

a $982,800 ÷ $819,000 direct labor costs = 120% of direct labor costs b Job no 50 Date Direct Materials Direct Labor Manufacturing Overhead Beg 23400 14040 18720 Jan 11700 5850 7020 35100 19890 25740 5850*120% Cost of completed job Direct Materials 35100 Direct Labor 19890 Manufacturing Overhead 25740 Total Cost 80730 Job no 51 Date Direct Materials Direct Labor Manufacturing Overhead Jan 45630 29250 35100 45630 29250 35100 29250*120% Cost of completed job Direct Materials 45630 Direct Labor 29250 Manufacturing Overhead 35100 Total Cost 109980 Job no 52 Date Direct Materials Direct Labor Manufacturing Overhead Jan 35100 23400 28080 35100 23400 28080 23400*120% c Raw material inventory 105300 Accounts payable 105300 Factory Labor 81900 Factory Wages Payable 63180 Employer payrol taxes payable 18720 Manufacturing Overhead 76050 Accounts payable 18720 Accumulated Depriciation 14040 Raw material inventory 19890 Factory Labor 23400 d Work in progress inventory 92430 Raw material inventory 92430 (11700+45630+35100) Work in progress inventory 58500 Factory Labor 58500 (5850+29250+23400) Work in progress inventory 70200 Manufacturing Overhead 70200 58500*120% Finished Goods Inventory 190710 Work in progress inventory 190710 (80730+109980) f Accounts Receivable 327600 Sales 327600 (142740+184860) Cost of goods sold 186030 Finished Goods Inventory 186030 (105300+80730) Finished Goods Inventory Beginning Balance 105300 Cost of jobs 49 and 50 sold 186030 Cost of completed jobs 50 and 51 190710 Ending Balance 109980 The balance in this account consists of the cost of completed Job No. 51 which has not yet been sold. h Manufacturing Overhead Actual Applied 76050 70200 -5850 The balance in the Manufacturing Overhead account is underapplied