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.

Multiple Choices:

1. Trigger Points Purchase & Sale: The entry to record the sale of goods will include:

a. Cost of Goods Sold 2,610,000 Credit

b. Finished Goods 2,610,000 Debit

c. No Entry

d. Raw and In Process 1,740,000 Credit

2. Trigger Points Purchase & Sale: The entry to adjust cost of goods sold by the end of the period will include:

a. Raw and In Process 1,880,000 Debit

b. Cost of Goods Sold 410,000 Debit

c. Cost of Goods Sold 410,000 Credit

d. Cash 1,880,000 Credit

3. Trigger Points Purchase & Sale: The entry for the completion of production will include:

a. Finished Goods 2,700,000 Debit

b. Various Accounts 1,280,000 Credit

c. No Entry

d. Raw and In Process 1,740,000 Credit