Just-in-Time Accounting Optic Matrix Inc. manufactures and assembles automobile
ID: 2466937 • Letter: J
Question
Just-in-Time Accounting
Optic Matrix Inc. manufactures and assembles automobile instrument panels for both Yokohama Motors and Detroit Motors. The process consists of a just-in-time product cell for each customer's instrument assembly. The data that follow concern only the Yokohama just-in-time cell.
For the year, Optic Matrix Inc. budgeted the following costs for the Yokohama production cell:
Optic Matrix Inc. plans 3,200 hours of production for the Yokohama cell for the year. The materials cost is $71 per instrument assembly. Each assembly requires 20 minutes of cell assembly time. There was no November 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.
The following summary events took place in the Yokohama cell during November:
Electronic parts and wiring were purchased to produce 10,900 instrument assemblies in November.
Conversion costs were applied for the production of 10,350 units in November.
10,140 units were started, completed, and transferred to finished goods in November.
9,840 units were shipped to customers at a price of $336 per unit.
If required, round to the nearest cent.
Required:
Hint(s)
1. Determine the budgeted cell conversion cost per hour.
$ per hour
2. Determine the budgeted cell conversion cost per unit.
$ per unit
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1. Budgeted conversion costs ÷ production hours = Conversion rate
2. (Cell process time ÷ 60 minutes) x Conversion rate from Req. (1) = Conversion cost per unit
Learning Objective 3.
Hint(s)
3. Journalize the summary transactions (a) through (d).
a.
b.
c.
d. Sale
Cost
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3.
(a) Increase Raw and In Process Inventory (debit) and increase Accounts Payable (credit) for per unit amount times 10,900 units.
(b) Conversion rate per unit from Req. (2) x 10,350 units = Total Conversion Costs to debit to Raw and In Process Inventory and credit to Conversion Costs.
(c) [Materials cost per unit + Conversion rate per unit from Req. (2)] x 10,140 units = Finished Goods Inventory (debit) and Raw and In Process Inventory (credit).
(d) Debit Accounts Receivable and credit Sales for 9,840 units x $336
Debit Cost of Goods sold and credit Finished Goods Inventory for 9,840 units x [Materials cost per unit + Conversion rate per unit from Req. (2)]
Learning Objective 3.
4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.
5. JIT accounting is different from traditional accounting because it is more SelectcomplexsimplifiedCorrect 3 of Item 3 and uses SelectmaximumminimalCorrect 4 of Item 3 control.
Conversion Cost Categories Budget Labor $177,400 Supplies 67,200 Utilities 24,200 Total $268,800Explanation / Answer
1) Per hour rate = $268800 / 3200 = $84 per hour
2) Per unit rate = $268800 / 10350 = $25.97 per unit
3) Journal Entries:
4. Ending balance :
in Raw and In Process Inventory = $53960 + 5453.70 = $59413.70
in Finished Goods Inventory = 983275.80 - 954184.80 = $29091
5. JIT accounting is different from traditional accounting because it is more simplified and uses maximum control.
Date Accounts Titles and explanation Debit $ Credit $ a Raw and In Process Inventory 773900 Accounts Payable 773900 b Raw and In Process Inventory 268800 Conversion Costs 268800 c Finished Goods Inventory 983275.80 Raw and In Process Inventory 983275.80 (71+25.97 * 10140) d Accounts Receivable 3306240 Sales 3306240 Cost of goods sold 954184.80 Finished goods inventory 954184.80Related Questions
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