Poteepoo Co., a producer of bicycle parts, has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of May, Poteepoo Co. had the following transactions: Raw materials purchased $810,000 Direct labor cost $135,000 Overhead cost $675,000 Conversion cost applied $877,500 ($135,000 direct labor plus $742,500 overhead cost) There was no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to the Cost of Goods Sold. (Variances are recognized monthly.) This point becomes the third trigger point for backflush accounting. Before installing a JIT system, Poteepoo Co. used maintenance hours to assign maintenance costs to its three products (wheels, seats, and handlebars). The maintenance costs totaled $1,960,000 per year. The maintenance hours used by each product and the quantity of each product produced are as follows: Wheels Seats Handle bars Maintenance Hours 60,000 60,000 80,000 Quantity Produced 52,500 52,500 70,000 After installing JIT, three manufacturing cells were created, and cell workers were trained to perform preventive maintenance and minor repairs. A full-time maintenance person was also assigned to each cell. Maintenance costs for the three cells still totaled $1,960,000; however, these costs are now traceable to each cell as follows: Cell, wheels Cell, seats Cell, handle bars $532,000 588,000 840,000 Required: 1. Prepare the journal entries for the month using backflush costing (10%) 2. Compute maintenance cost per unit for each product for the pre-JIT and JIT situation. Which version is more accurate, and why (explain)? (5 %)