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 $24,600, direct labor $14,760, and manufacturing overhead $19,680. As of January 1, Job No. 49 had been completed at a cost of $110,700 and was part of finished goods inventory. There was a $18,450 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 $150,060 and $194,340, respectively. The following additional events occurred during the month.

1.		Purchased additional raw materials of $110,700 on account.
2.		Incurred factory labor costs of $86,100. Of this amount $19,680 related to employer payroll taxes.
3.		Incurred manufacturing overhead costs as follows: indirect materials $20,910; indirect labor $24,600; depreciation expense on equipment $14,760; and various other manufacturing overhead costs on account $19,680.
4.		Assigned direct materials and direct labor to jobs as follows.

Job No.		Direct Materials		Direct Labor
50		$12,300		$6,150
51		47,970		30,750
52		36,900		24,600

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. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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

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). (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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

Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry to record the completion of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

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

No.	Account Titles and Explanation	Debit	Credit
(1)
	(To record sale of jobs)
(2)
	(To record cost of jobs)

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

Finished Goods Inventory

$

Job No. 50/Job No. 51/Job No. 52/Jobs 50 and 51/Jobs 51 and 52/ or Jobs 50 and 52

What is the amount of over- or underapplied overhead?

Manufacturing Overhead

Answer 1

	Direct material cost	Direct labor Cost	Applied Manufactured overhead (Direct labor cost * 120%)
Job No. 50	12,300	6,150	7,380
Job No. 51	47,970	30,750	36,900
Job No. 52	36,900	24,600	29,520
Total	97,170	61,500	73,800

Job No. 50	Direct material	Direct labor	manufacture overhead
Beg.	24,600	14,760	19,680
Jan	12,300	6,150	7,380
total	36,900	20,910	27,060
Cost of completed Job
Direct material			36,900
Direct labor			20,910
manufacture overhead			27,060
Total cost			84,870

Job No. 51	Direct material	Direct labor	manufacture overhead
Beg.		-	-
Jan	47,970	30,750	36,900
total	47,970	30,750	36,900
Cost of completed Job
Direct material			47,970
Direct labor			30,750
manufacture overhead			36,900
Total cost			115,620

Job No. 52	Direct material	Direct labor	manufacture overhead	Total
Jan	36,900	24,600	29,520	91,020

Answer

Lott Company
Journal entries
Event	Account title	Debit	Credit
1	Raw material inventory	110,700
	Account payable		110700
	(To record Purchase of raw material inventory
1	Wages payable	86,100
	Cash (86100-19680)		66,420
	Payroll tax payable		19,680
	(To incurred factory labor cost.)
1	Manufacture overhead	79,950
	Raw material inventory		20,910
	Wages payable		24,600
	Account Payable		19,680
	Accumulated depreciation -equipment		14,760
	(To incurred Manufacture overhead.)
2	Work in progress inventory	97,170
	Raw material inventory		97170
	(To record Issue of raw material inventory into production process.)
2	Work in progress inventory	61,500
	Wages payable		61500
	(To record direct labor Consumed.)
2	Work in progress inventory	73,800
	Manufacture overhead		73800
	(To record Manufacture overhead Applied to Job.)
3	Finished goods inventory	200,490
	Work in progress inventory		200490
	(To record completion of Finished goods inventory.) (84870+115620)
4	Cost of goods sold	195,570
	Finished goods inventory		195570
	(To record Finished goods Inventory sold.) (110700+84870)
4	Account receivable	344400
	Sales Revenue		344400
	(To record sales revenue.) (150060+194340)

Finished Goods Inventory
Transaction	Debit	Credit	Balance
Beg. Bal	110,700	195,570	Cost of Goods sold
Completion of job	200,490
End. Bal	115,620
Ending finished goods inventory (Check above table)		$     115,620	Job No. 51

Actual Manufacture overhead cost incurred	$        79,950
Less: Applied of manufacture overhead	$        73,800
Underapplied overhead	$          6,150