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

Titan produces sports watches. The company has a JIT production system and uses JIT costing.

Titan has two inventory accounts, Raw and In Process Inventory and Finished Goods Inventory. On August 1, 2007, the account balances were Raw and In Process Inventory, $12,000; Finished Goods Inventory, $2,000.

Titan’s standard cost per watch is $55: $35 direct materials plus $20 conversion costs. The following data pertain to August manufacturing and sales:

Requirements 1. What are the major features of a JIT production system such as Titan’s?
2. (Appendix) Prepare summary journal entries for August. Underallocated and overallocated conversion costs are closed to Cost of Goods Sold at the end of each month.
3. (Appendix) Use a T-account to determine the August 31, 2007, balance of Raw and In Process Inventory.

Transcribed Image Text:

Number of watches completed.... 9,000 watches Raw material purchased....... $305,000 Number of watches sold............... 8,800 watches Conversion costs incurred.... $116,000