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.

Requirements

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.