Concept explainers
Lott Company uses a job order cost system and applies
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 $122,000 and $158,000, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $90,000 on account.
2. Incurred
3. Incurred manufacturing overhead costs as follows indirect materials $17,000, indirect labor $20,000,
4. Assigned direct materials and direct labor to jobs as follows.
Job No. | Direct Materials | Direct Labor |
50 | $10,000 | $ 5,000 |
51 | 39,000 | 25,000 |
52 | 30,000 | 20,000 |
Instructions
(a) Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total manufacturing overhead costs of $840,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.
(b) Open
(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.
(d) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.
(e) Total the job cost sheets for any job(s) completed during; the month. Prepare the
(f) Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
(g) What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of?
(h) What is the amount of over- or underapplied overhead?
Prepare entries in a job order cost system and job cost sheets.
(LO 1, 2, 3, 4, 5), AP
(e) Job 50, $69,000
Job 51, $94,000
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