1. Lee Company has a Singapore plant that manufactures Blu-Ray players. One component is an XT chip. Expected demand is for 5,200 of these chips in March 2020. Lee estimates the ordering cost per purchase order to be $250. The monthly carrying cost for one unit of XT in stock is $5.

Required:
1. Compute the EOQ for the XT chip.
2. Compute the number of deliveries of XT in March 2020.

2. Littlefield Company uses a backflush costing system with three trigger points:
• Purchase of direct materials
• Completion of good finished units of product
• Sale of finished goods
There are no beginning inventories. Information for April 2020 is as follows:

Required:

1. Prepare journal entries for April (without disposing of under- or overallocated conversion costs). Assume there are no direct materials variances.
2. Under an ideal JIT production system, how would the amounts in your journal entries differ from the journal entries in requirement 1?

Transcribed Image Text:

Direct materials purchased Direct materials used Conversion costs incurred $880,000 $850,000 $422,000 Conversion costs allocated Costs transferred to finished goods Cost of goods sold $ 400,000 $1,250,000 $1,190,000