Problem 20-1A overhead $18,720. As of January 1, Job No. 49 had been completed a

Question

Problem 20-1A overhead $18,720. As of January 1, Job No. 49 had been completed at a cost of $105,300 and was part of finished goods inventory. There was a $17,550 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 $142,740 and $184,860, respectively, The following additional events occurred during the month. 1. 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 $23,400, direct labor $14,040, and manufacturing Purchased additional raw materials of $105,300 on account. Incurred factory labor costs of $81,900. Of this amount $18,720 related to employer payroll taxes. Incurred manufacturing overhead costs as follows: indirect materials $19,890; indirect labor $23,400; depreciation expense on equipment $14,040; and various other manufacturing overhead costs on account $18,720. Assigned direct materials and direct labor to jobs as follows. 2. Incured manufactutnals and direct 2. 3. 4. ect Materials abor $5,850 29,250 23,400 No. $11,700 45,630 35,100 51

Explanation / Answer

1) Overhead cost = 18720/14040 = 133.33% of direct labor cost

Job50 = 5850 *133.33% = 7800

Job 51 = 29250*133.33% = 39000

Total cost of job 50 and 51 =23400+14040+18720+ 11700+45630+5850+7800+29250+39000= 195390

cost of job 49 and 50 = 105300+ 11700+5850+7800 = 130650

3)Balace in finished goods inventory =cost of job 51 = 45630+29250+39000 = 113880

4) Actual overhead = 76050                 [19890+23400+14040+18720]

Overhead applied = [5850+29250+23400]=58500*133.33% = 78000

overhead overapplied = 78000-76050 = 1950

Date Account title debit credit 1) Finished goods inventory 195390 Work in process 195390 [being goods completed transfered ] 2) Accounts receivable 327600 sales               (142740+184860] 327600 [sales made on account ] cost of goods sold 130650 Inventory 130650 [To record cost of sales ]

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