Question

Lott company uses a

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 $22,000, direct labor $13,200, and manufacturing overhead $17,600. As of January 1, Job 49 had been completed at a cost of $99,000 and was part of finished goods Inventory. There was a $16,500 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 $134,200 and $173,800, respectively. The following additional events occurred during the month. 1. 2. 3. Purchased additional raw materials of $99,000 on account. Incurred factory labor costs of $77,000 of this amount $17,600 related to employer payroll taxes Incurred manufacturing overhead costs as follows: indirect materials $18,700; indirect labor $22,000; depreciation expense on equipment $13,200, and various other manufacturing overhead costs on account $17,600. Assigned direct materials and direct labor to jobs as follows. 4. Job No. Direct Materials so $11,000 42,900 33,000 Direct Labor $5,500 27,500 22,000 Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $924,000, direct labor costs of $770,000, and direct labor hours of 22,000 for the year. Predetermined overhead rate

Answer 1

predetermined overhead rate
Estimated manufacturing overhead/total estimated direct labor costs
924000/770,000
120.00%
job no 50
Date		Direct	direct	MOH
		materials	labor
beg.		22,000	13,200	17,600
Jan		11,000	5,500	6,600
		33,000	18,700	24,200
cost of completed job
Direct materials				33,000
direct labor				18,700
MOH				24,200
total cost				75,900
job no 51
Date		Direct	direct	MOH
		materials	labor
Jan		42,900	27,500	33,000
		42,900	27,500	33,000
cost of completed job
Direct materials				42,900
direct labor				27,500
MOH				33000
total cost				103,400
Job 52
Date		Direct	direct	MOH
		materials	labor
Jan		33,000	22,000	26,400
No	Account titles & Explanations				Debit	Credit
1)	Raw materials inventory				99,000
	Accounts payable					99,000
2)	Factory labor				77,000
	Factory wages payable					59,400
	employer payroll taxes payable					17,600
3)	manufacturing overhead				71,500
	raw materials inventory					18,700
	Factory labor					22,000
	Accumulated depreciation					13,200
	Accounts payable					17,600
No	Account titles & Explanations				Debit	Credit
1)	Work in process inventory				86,900
	Raw materials inventory					86,900
2)	work in process inventory				55,000
	Factory labor					53,000
3)	Work in process inventory				66000
	manufacturing overhead					66,000
	Account titles & Explanations				Debit	Credit
	finished goods inventory				179,300
	work in process inventory					179,300
	(job 50 +job 51 =
No	Account titles & Explanations				Debit	Credit
	Accounts receivable				308000
	sales					308,000
	cost of goods sold
	finished goods inventory				174,900
	(job 49+job 50)					174,900
finished goods inventory			103,400	Job No 51
			finished goods inventory
	opening		99,000	COGS		174,900
	WIP		179,300
	end bal		103,400
manufacturing overhead			5,500	under applied
		manufacturing overhead
	Actual		71,500	Applied		66,000
	bal		5,500