Recording manufacturing costs for a JIT costing system High Point produces fleece jackets. The company uses JIT costing for its JIT production system. High Point has two inventory accounts: Raw and in process inventory and Finished goods inventory. On February 1, 2012, the account balances were Raw and in process inventory, $7,000; Finished goods inventory, $2,200.
The standard cost of a jacket is $37, comprised of $13 direct materials plus $24 conversion costs. Data for February’s activities follow:
|
Number of jackets completed |
20,000 |
Direct materials purchased |
$ 257,500 |
|
Number of jackets sold |
19,600 |
Conversion costs incurred |
$ 580,000 |
Requirements
1. What are the major features of a JIT production system such as that of High Point?
2. Prepare summary journal entries for February. Under or over allocated conversion costs are closed to Cost of goods sold monthly.
3. Use a T account to determine the February 29, 2012, balance of Raw and in process inventory.