Question

Problem 15-01A 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 $25,000, direct labor $15,000, and manufacturing overhead $20,000. As of January 1, Job 49 had been completed at a cost of $112,500 and was part of finished goods inventory. There was a $18,750 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 $152,500 and $197,500, respectively. The following additional events occurred during the month. Purchased additional raw materials of $112,500 on account. 1. Incurred factory labor costs of $87,500. Of this amount $20,000 related to employer payroll taxes. 2. Incurred manufacturing overhead costs as follows: indirect materials $21,250; indirect labor $25,000; depreciation expense on equipment $15,000; and various other manufacturing overhead costs on account $20,000. 4. Assigned direct materials and direct labor to jobs as follows. 3. Job No. Direct Materials Direct Labor $12,500 $6,250 50 31,250 48,750 51 37,500 25,000 52 V Your answer is correct. Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $1,050,000, direct labor costs of $875,000, and direct labor hours of 25,000 for the year. Predetermined overhead rate 120 SHOW LIST OF ACCOUNTS

Answer 1

predetermined overhead rate
Estimated manufacturing overhead/total estimated direct labor costs
1050000/875000
120.00%
job no 50
Date		Direct	direct	MOH
		materials	labor
beg.		25,000	15,000	20,000
Jan		12,500	6,250	7,500
		37,500	21,250	27,500
cost of completed job
Direct materials				37,500
direct labor				21,250
MOH				27,500
total cost				86,250
job no 51
Date		Direct	direct	MOH
		materials	labor
Jan		48,750	31,250	37,500
		48,750	31,250	37,500
cost of completed job
Direct materials				48,750
direct labor				31,250
MOH				37500
total cost				117,500
Job 52
Date		Direct	direct	MOH
		materials	labor
Jan		37,500	25,000	30,000
No	Account titles & Explanations				Debit	Credit
1)	Raw materials inventory				112,500
	Accounts payable					112,500
2)	Factory labor				87,500
	Factory wages payable					67,500
	employer payroll taxes payable					20,000
3)	manufacturing overhead				81,250
	raw materials inventory					21,250
	Factory labor					25,000
	Accumulated depreciation					15,000
	Accounts payable					20,000
No	Account titles & Explanations				Debit	Credit
1)	Work in process inventory				98,750
	Raw materials inventory					98,750
2)	work in process inventory				62,500
	Factory labor					53,000
3)	Work in process inventory				75000
	manufacturing overhead					75,000
	Account titles & Explanations				Debit	Credit
	finished goods inventory				203,750
	work in process inventory					203,750
	(job 50 +job 51 =
No	Account titles & Explanations				Debit	Credit
	Accounts receivable				350000
	sales					350,000
	cost of goods sold
	finished goods inventory				198,750
	(job 49+job 50)					198,750
finished goods inventory			117,500	Job No 51
			finished goods inventory
	opening		99,900	COGS		198,750
	WIP		203,750
	end bal		104,900
manufacturing overhead			6,250	under applied
		manufacturing overhead
	Actual		81,250	Applied		75,000
	bal		6,250