Recording manufacturing costs in a JIT costing system
Lancer, Inc., produces universal remote controls. Lancer uses a JIT costing system. One of the company’s products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2012, Lancer produced 600 units and sold 595. It purchased $6,300 of direct materials and incurred actual conversion costs totaling $17,500.
1. Prepare summary journal entries for January.
2. The January 1, 2012, balance of the Raw and in process inventory account was $50. Use a T account to find the January 31 balance.
3. Use a T account to determine whether conversion costs are over or underallocated for the month. By how much? Prepare the journal entry to close the Conversion costs account.