Question

Problem 16-1A Lott Company uses a job order cost system andapplies overhead to production on the basis of direct labor costs.On January 1, 2017, Job No. 50 was the only job in process. Thecosts incurred prior to January 1 on this job were as follows:direct materials $ 21,400 , direct labor $ 12,840 , andmanufacturing overhead $ 17,120 . As of January 1, Job No. 49 hadbeen completed at a cost of $ 96,300 and was part of finished goodsinventory. There was a $ 16,050 balance in the Raw MaterialsInventory account. During the month of January, Lott Company beganproduction on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49and 50 were also sold on account during the month for $ 130,540 and$ 169,060 , respectively. The following additional events occurredduring the month.

1. Purchased additional raw materials of $ 96,300 onaccount.

2. Incurred factory labor costs of $ 74,900 . Of this amount $17,120 related to employer payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirectmaterials $ 18,190 ; indirect labor $ 21,400 ; depreciation expenseon equipment $ 12,840 ; and various other manufacturing overheadcosts on account $ 17,120 .

4. Assigned direct materials and direct labor to jobs asfollows.

Job No. Direct Materials Direct Labor

Job No.	Direct Materials	Direct Labor
50	$10,700	$5,350
51	$41,730	$26,750
52	$32,100	$21,400

Calculate the predetermined overhead rate for 2017, assumingLott Company estimates total manufacturing overhead costs of$898,800, direct labor costs of $749,000, and direct labor hours of21,400 for the year. (Round answer to the nearest whole percent,e.g. 25%.)

Predetermined overhead rate = %

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Open job cost sheets for Jobs 50, 51, and 52. Enter the January1 balances on the job cost sheet for Job No. 50.

Job No. 50

Date	Direct Materials	Direct Labor	Manufacturing Overhead
Beg.
Jan.
Totals

Cost of completed job	?
Direct materials	?
Direct labor	?
Manufacturing overhead	?
Total cost	?

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Job No. 51

Date	Direct Materials	Direct Labor	Manufacturing Overhead
Beg.
Jan.
Totals

Cost of completed job	?
Direct materials	?
Direct labor	?
Manufacturing overhead	?
Total cost	?

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Job No. 52

Date	Direct Materials	Direct Labor	Manufacturing Overhead
Jan

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Prepare the journal entries to record the purchase of rawmaterials, the factory labor costs incurred, and the manufacturingoverhead costs incurred during the month of January.

No	Account Titles and Explanation	Debit	Credit
1)	x
	x
2)	x
	x
	x
3)	x
	x
	x
	x

x

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Prepare the journal entries to record the assignment of directmaterials, direct labor, and manufacturing overhead costs toproduction. In assigning manufacturing overhead costs, use theoverhead rate calculated in (a). (Credit account titlesare automatically indented when amount is entered. Do not indentmanually.)

No.	Account Titles and Explanation	Debit	Credit
1)
2)
3)

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Total the job cost sheets for any job(s) completed during themonth. Prepare the journal entry to record the completion of anyjob(s) during the month. (Credit account titles areautomatically indented when amount is entered. Do not indentmanually.)

Account Titles and Explanation	Debit	Credit

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Prepare the journal entries to record the sale of any job(s)during the month. (Credit account titles areautomatically indented when amount is entered. Do not indentmanually.)

No	Account Titles and Explanation	Debit	Credit
1)	Accounts Receivable
	Sales Revenue
	(To record sale of jobs)
2)	Cost of Goods Sold
	Finished Goods Inventory
	(To record cost of jobs)

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What is the balance in the Finished Goods Inventory account atthe end of the month? What does this balance consist of?

Finished Goods Inventory $___________________

What is the amount of over- or underapplied overhead?

Manufacturing Overhead $_____________________