Problem 20-1A ny uses a job order cost system and applies overhead to production

Question

Problem 20-1A ny 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 Lott process. The costs incurred prior to January 1 on this ob were as follows: direct materials 22,600, direct labor $13,560, and manufacturing overhead $18,080. As or January 1, Job No. 49 had been completed at a cost of $101,700 and was part of finished goods inventory. There was a $16,950 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 atso sold on account during the month for $137,860 and $178,540, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $101,700 on account 2. Incurred factory labor costs of $79,100. Of this amount $18,080 related to employer payroll taxes. 3. Incurred overhead costs as follows: indirect materials $19,210; Indirect labor $22,600; depreciation expense on equipment $13.560: and vancus other manufacturing overhead costs on account $18,080. Job No Labor $11,300 44,070 33,900 51 28,250 estimates total manufactuning overhead costs of $949,200, direct lader costs of $791,000, and Open job cost shets for Jobs so, 51, and 52. Enter the lanuary : balanes on te poo cssreet for 5oo No. Job No.50

Explanation / Answer

Pre-determined OH rate: Estimted OH/ Estimated Direct labour cost *100 949200/ 791000*100 = 120% of Labour cost Job nO.50 Material labour Overheads Beginning Cost 22,600 13560 18080 jan 11300 5650 6780 Total 33,900 19,210 24,860 Cost of c completed Job: Material 33900 labour 19210 Overheads 24860 Total cost 77,970 Job No.51 Material labour Overheads jan 44070 28250 33900 Total 44,070 28,250 33,900 Cost of c completed Job: Material 44070 labour 28250 Overheads 33900 Total cost 106220 Job No. 52 Material labour Overheads jan 33900 22600 27120 Total 33,900 22,600 27,120 Req : Journal entries: Raw material Inventory Dr. 101700     Accounts payable 101700 Factory wages Dr. 79100      Wages payable Dr. 61020      Payroll tax payable 18080 Factory Overheads Dr. 73450      Raw material Inventory 19210      Factory wages 22600       Accumulated depreciation 13560       Accounts payable 18080 Rreq : Work in process Inventory Dr. 89270     Raw material Invenory 89270 Work in procss Inventory Dr. 56500      Factory Wages 56500 Work in Process Dr. 67800 67800      Factory Overheads (56500*120%) Req : Finished Goods ivnentory Dr. 184190      Work in process Inventory 184190 Req : Accounts receivable Dr. 316400 (137860+178540)      Sales revenue 316400 Cost of Goods sold 179670      Finished Goods inventory 179670 Req : Finished goods inventory (Job no.51) 106220    Req : Under/Over-applied OH: Overheads incurred 73450 less: Oh applied 67800 Under-applied OH 5650

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