JUST IN TIME SYSTEM AND BACKFLUSH ACCOUNTING

Sillicon Valley Corporation (SVC), which produces keyboards for personal computers. We assume the following information for SVC for the month of April.

There are no beginning inventories of direct materials. Moreover, there is zero beginning and ending work in process.

SVC has only one direct manufacturing cost strategy (direct materials) and one indirect manufacturing cost category (conversion costs). All manufacturing labor costs are included in conversion costs.

From its bill of materials and an operations list, SVC determines that direct material cost per keyboard unit is P20 and estimated conversion cost is P10.

SVC purchases P1,880,000 of direct materials. Actual conversion costs equal P1,280,000. SVC produces 90,000 good keyboard units and sells 87,000 units.

Any under allocated or over allocated conversion costs are written off to Cost of goods sold at the end of the month.

Ready the following (any item may be asked on the online exam i.e. debits and credit of a particular entry)

Journal Entries if:

Trigger points - Purchase, completion, sale

Purchase, Sale

Completion and sale

Provide a General Ledger Overview for each

Find the following for each

COGS

RIP end

FG end

Backflushed amount

JOINT AND BY-PRODUCT

Maroon Ltd is a company that produces chemicals for the cleaning industry. One of its processes manufactures join products Y and Z, and by-product X. The company uses the net realizable value of its joint products to allocate joint production costs. The by-product is valued for inventory purposes at its market value less its disposal cost, and this value is used to reduce the joint production cost of P2,015,000. Information regarding the company's August 2020 operations are presented below:

In liters

Y

Z

X

Finished Goods inventory, August 1

30,000

100,000

40,000

August Sales

1,340,000

760,000

240,000

August Production

1,600,000

800,000

200,000

In Peso

Further Processing cost

1,400,000

1,520,000

Final Sales value per Liter

10

14

Sales value per liter at split off

2.40

Disposal Cost per liter

0.40

Required:

Calculate the by-product income

Calculate the adjusted joint cost for allocation for August

Calculate the allocation of joint cost for August for products Y and Z

Calculate the unit cost per product and value of closing inventory

The company has an opportunity to sell product Z at split off for P10 per liter. Prepare an analysis to show whether Z should be sold at split off point or further processing.

Split your joint costs between join products using physical unit method.