Lancer, Inc. produces universal remote controls. Lancer uses a JIT costing syste
ID: 2541856 • Letter: L
Question
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 S6 per unit and a standard conversion cost of $27 per unit. During January 2018, Lancer produced 625 units and sold 620 units on account at $46 each. It purchased $5,200 of direct materials on account and incurred actual conversion costs totaling $15,500 Read the requirements Requirement 1. Prepare the summary journal entries for January. (Record debits first, then credits. Exclude explanations from journal entries.) Journalize the purchase of raw materials. Date Accounts Debit Credit Jan. 2018 Journalize the actual conversion costs incurred Accounts Debit Credit Jan. 2018Explanation / Answer
Raw & Inpocess inventory A/c
Conversion Cost
Total conversion costs are $15575, overapplied By $75
Journalising adjusted cost of conversion
Jan 2018 Cost of goods sold Dr 75
Conversion Cost Cr 75
(increased cost transferred to cost of goods sold)
Working:-
Std material Cost = 625 x 6 = 3750
Std Conversion cost = 625 x 27 = 16875
Total Std Cost = 3750 + 16875 =$20625
Actual Cost = 5200 + 15500 = $20700
overapplication on conversion cost = $20700 - $20625 =$75
Sale price of 620 unit = 620 x 46 = $28520
cost of goods sold of 620 units = $20700 / 625 * 620 = $20534
It is assumed that production of 625 units is done by consuming only direct material purchased in january 2018
Purchase of Raw Material Date Accounts Head Debit Credit Jan 2018 Raw & Inprocess Material 5200 A/c Payable 5200 Actual Conversion Cost incurred Jan 2018 Conversion Cost 15500 A/c Payable 15500 Journalising Completed Production Jan 2018 Finished Goods Inventory 20700 Raw & Inprocess Material 5200 Conversion Cost 15500 Journalising the sales Jan 2018 A/c Receivable 28520 Cost of goods sold 20534 profit on sale of goods 7986 Journalising the cost of goods sold Jan 2018 Cost of goods sold 20534 Finished Goods Inventory 20534Related Questions
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