Question: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 March 1, 2018, the account balances were Raw and In-Process Inventory, \(9,000; Finished Goods Inventory, \)1,700.

The standard cost of a jacket is \(40, composed of \)12 direct materials plus \(28 conversion costs. Data for March’s activities follow:

Number of jackets completed 15,000

Number of jackets sold (on account, for \)50 each) 14,600

Direct materials purchased (on account) \( 177,500

Conversion costs incurred \) 521,000

Requirements

3. Use a T-account to determine the March 31, 2018, balance of Raw and In-Process Inventory.

Step by step solution

01

Raw and In-process Inventory

Raw and In-process inventory account is a combination of both raw inventory account and work-in-process inventory account. Under the JIT system cost of goods sold is not recorded until units are completed. So there is no track record of raw material to work in the process to finished goods inventory for COGS. There is only one combined account used.

02

Raw and In-process inventory account for “Low Range”

Date	Particular	Amount	Date	Particular	Amount
March 1	To Balance b/d	$ 9,000	Trans. 3	By Finished Goods Inventory	$180,000
Trans. 1	To Accounts Payable	177,500	March 31	By Balance c/d	6,500

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!