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Quiz 1 Just in Time System

The Wizz Manufacturing Company uses a just-in-time system with a 2.0 day cycle time, charging conversion costs to cost of goods sold each month and backflushing raw materials from the raw and in process inventory account to finished goods. The document provides beginning and ending inventory balances for raw and in process inventory and finished goods, materials purchased and conversion costs for the month of May, and requires calculating the amount of materials backflushed between the accounts and the journal entries to record the transactions.

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Micah Carpio
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416 views

Quiz 1 Just in Time System

The Wizz Manufacturing Company uses a just-in-time system with a 2.0 day cycle time, charging conversion costs to cost of goods sold each month and backflushing raw materials from the raw and in process inventory account to finished goods. The document provides beginning and ending inventory balances for raw and in process inventory and finished goods, materials purchased and conversion costs for the month of May, and requires calculating the amount of materials backflushed between the accounts and the journal entries to record the transactions.

Uploaded by

Micah Carpio
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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QUIZ 1

JUST-IN-TIME SYSTEM

The Wizz Manaufacturing Company has a cycle time of 2.0 days, uses a Raw and In Process account (RIP
and charges all conversion costs to Cost of Goods Sold. At the end of each month, all invemtories are cou
conversion cost components are estimated and inventory account balances are adjusted. Raw materials c
backflushed from RIP to Finished Goods. The following is for the month of May:

RIP beginning, including P12,000 of conversion cost P 40,000


FG beginning, including P8,800 of conversion cost 35,000
Raw materials purchased on credit 230,000
RIP end, including P15,700 of conversion cost 28,500
FG end, including P13,100 of conversion cost 19,800

Conversion cost - P180,000 of direct labor and P 225,000 of overhead.

REQUIRED:

1 Amount of materials backflushed from RIP to Finished Goods


Materials Purchased 230,000
Add: RIP, Beg (40,000-12,000) 28,000
Less:RIP, End (28,500-15,700) 12,800
Amount to be Backflushed 245,200

2 Amount of materials backflushed from Finished Goods to Cost of Goods Sold


Materials Backflushed from RIP to Fin Goods 245,200
Add: FG, Beg (35,000-8,800) 26,200
Less:FG, End (19,800-13,100) 6,700
Amount to be Backflushed 264,700

3 Journal entries to record the given transactions: (use the general journal provided below:

Date Particulars Debit Credit


Raw and in Process 230,000
Accounts Payable 230,000

Finished Goods 245,200


Raw and in Process 245,200
Cost of Goods Sold 264,700
Finished Goods 264,700

Cost of Goods Sold 405,000


Accrued Payroll 180,000
Factory Overhead Applied 225,000

Finished Goods 4,300


Cost of Goods Sold 600
Raw and in Process 3,700
nd In Process account (RIP) account
th, all invemtories are counted, their
adjusted. Raw materials cost is

Goods Sold

journal provided below:


RIP FG
End 12,000 13,100
Beg 15,700 8,800
Increase(Decrease) -3,700 4,300
A.

Carrying Cost ((12% x 700,000) + 60,000) 144,000


Rework Savings (350,000 x 20%) 70,000
214,000
Incremental Contribution Margin (30,000 x 3) 90,000
Total Benefits 304,000
Less: Additional Annual Tooling Costs 150,000
Net Benefit 154,000

B.
Amount of materials backflushed from RIP to Finished Goods
Materials Purchased 444,000
Add: RIP, Beg (23,400-2,400) 21,000
Less: RIP, End (25,600-3,600) 22,000
Amount to be Backflushed 443,000

Amount of materials backflushed from Finished Goods to Cost of Goods Sold


Materials Backflushed from RIP to Fin Goods 443,000
Add: FG, Beg (24,000-8,000) 16000
Less:FG, End (19,000-7,000) 12000
Amount to be Backflushed 447,000

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