Complete Question:
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 $ 22,000 ,
direct labor $ 13,200
manufacturing overhead $ 17,600
As of January 1, Job No. 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. Purchased additional raw materials of $ 99,000 on account.
2. Incurred factory labor costs of $ 77,000 . Of this amount $ 17,600 related to employer payroll taxes.
3. 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 .
4. Assigned direct materials and direct labor to jobs as follows.
Job No. Direct Direct
Materials Labor
50 $ 11,000 $ 5,500
51 42,900 27,500
52 33,000 22,000
Answer:
Lott Company
1. Journal Entries to record the sale of Job 49 and Job 50:
Debit Cost of Goods Sold $175,450
Credit Finished Goods
Job 49 $99,000
Job 50 $76,450
To record the cost of Jobs 49 and 50 sold during the period.
Debit Accounts Receivable:
Job 49 $134,200
Job 50 $173,800
Credit Sales Revenue $308,000
To record the sale of Jobs 49 and 50 during the period.
2. The balance in the Finished Goods Inventory account at the end of the month is:
= $106,150.
This balance consists of Job 51 only.
3. There is no provision of estimated manufacturing overhead. Therefore, there is no overapplied or underapplied overhead in this situation. The manufacturing overhead costs were applied based on the actual costs incurred.
Step-by-step explanation:
a) Data and Calculations:
Cost of Work-in-Process or Production:
Job No. Direct Direct WIP Overhead
Materials Labor Beginning Costs Closing
50 $ 11,000 $ 5,500 $52,800 $7,150 $76,450
51 42,900 27,500 0 35,750 106,150
52 33,000 22,000 0 28,600 83,600
January 1, Job 50 Cost of WIP:
direct materials $ 22,000
direct labor 13,200
manufacturing overhead 17,600
Beginning WIP of Job 50 $52,800
Manufacturing overhead costs:
indirect materials $ 18,700
indirect labor $ 22,000
depreciation expense
on equipment $ 13,200
other overhead costs $ 17,600
Total overhead costs = $71,500
Allocation of manufacturing overhead costs:
Jobs Direct Labor Overhead Allocation
50 $ 5,500 $7,150 ($5,500 * $1.30)
51 27,500 $35,750 ($27,500 * $1.30)
52 22,000 $28,600 ($22,000 * $1.30)
Total $ 55,000 $71,500