Freeze Point produces fleece jackets The company uses JIT costing
Freeze Point produces fleece jackets. The company uses JIT costing for its JIT production system. Freeze Point has two inventory accounts: Raw and In-Process Inventory and Finished Goods Inventory On February 1, 2016, the account balances were Raw and In-Process Inventory $13,000; Finished Goods Inventory $2,000.
The standard cost of a jacket is $35, composed of $13 direct materials plus $22 conversion costs. Data for February’s activities follow:
Number of jackets completed ............. 16,000
Number of jackets sold (on account, for $95 each) ...... 15,600
Direct materials purchased (on account) ........ $ 200,500
Conversion costs incurred ............. $ 452,000
1. What are the major features of a JIT production system such as that of Freeze Point?
2. Prepare summary journal entries for February. Under-allocated or over-allocated conversion costs are adjusted to Cost of Goods Sold monthly.
3. Use a T-account to determine the February 29, 2016, balance of Raw and In-Process Inventory
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