(L. OBJ. 3) Recording manufacturing costs for a JIT costing system [15—25 min] Low Rang...

(L. OBJ. 3) Recording manufacturing costs for a JIT costing system [15—25 min]

Low Range produces fleece jackets. The company uses JIT costing for its JIT production system.

Low Range has two inventory accounts: Raw and in-process inventory and Finished goods inventory. On February 1, 2010, the account balances were Raw and in-process inventory, $13,000; Finished goods inventory, $2,000.

The standard cost of a jacket is $45: $18 direct materials plus $27 conversion costs. Data for February’s activities follow:

Requirements

1. What are the major features of a JIT production system such as that of Low Range?

2. Prepare summary journal entries for February. Under- or over allocated conversion costs are closed to Cost of goods sold monthly.

3. Use a T-account to determine the February 28, 2010, balance of Raw and in-process inventory.