JIT features and JIT costing (Learning Objectives 4, 6)

North Slope produces fleece jackets. The company uses JIT costing for its JIT production system.

North Slope has two inventory accounts: Raw and In Process Inventory and Finished Goods Inventory. Qn October 1, 2007, the account balances were Raw and In Pro,cess Inventory, $6,000; Finished Goods Inventory, $1,000.

The standard cost of a jacket is $50: $15 direct materials plus $35 conversion costs. Data for October’s activity follow.

Requirements 1. What are the major features of a JIT production system such as North Slope?
2. (Appendix) Prepare summary journal entries for October. Underallocated or overallocated conversion costs are closed to Cost of Goods Sold monthly.
3. (Appendix) Use a T-account to determine the October 31, 2007, balance of Raw and In Process Inventory.

Transcribed Image Text:

Number of jackets completed........ 18,000 Number of jackets sold....... 17,600 Direct materials purchased...... $265,000 Conversion costs incurred....... 551,000