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

Timekeepers 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, \(\$ 2,000\).

Timekeepers's standard cost per watch is \(\$ 50\) : \(\$ 30\) 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 that of Timekeepers?

2. Prepare summary journal entries for August. Under- and overallocated conversion costs are closed to Cost of Goods Sold at the end of each month.

3. Use a T-account to determine the August 31, 2007, balance of Raw and In-Process Inventory. 

Transcribed Image Text:

Number of watches completed Number of watches sold 9,000 watches Raw materials purchased 8,800 watches Conversion costs incurred $300,000 $100,000