Lott Company uses a job order cost system and applies overhead
to production on the basis of direct labor costs. On January 1,
2020, Job 50 was the only job in process. The costs incurred prior
to January 1 on this job were as follows: direct materials $20,000,
direct labor $12,000, and manufacturing overhead $16,000. As of
January 1, Job 49 had been completed at a cost of $90,000 and was
part of finished goods inventory. There was a $15,000 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 $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 factory labor costs of $70,000. Of this amount $16,000
related to employer payroll taxes. |
| 3. |
|
Incurred manufacturing overhead costs as follows: indirect
materials $17,000; indirect labor $20,000; depreciation expense on
equipment $12,000; and various other manufacturing overhead costs
on account $16,000. |
| 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 |
|
|
|
|