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 Labor50 $10,000 $5,00051 39,000 25,00052 30,000 20,000(a) Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $840,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.Predetermined overhead rate enter the Predetermined overhead rate in percentages%

Predetermined overhead rate = Estimated Total Manufacturing costs /Direct Labor costs

Answered: (a) Calculate the predetermined…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Job No.	Direct Materials	Direct Labor
50	$10,000	$5,000
51	39,000	25,000
52	30,000	20,000

(a) Calculate the predetermined overhead rate for 2020, assuming Lott Company estimates total manufacturing overhead costs of $840,000, direct labor costs of $700,000, and direct labor hours of 20,000 for the year.

Predetermined overhead rate

enter the Predetermined overhead rate in percentages

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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.