The Acton Corporation manufactures electrical meters. For August,
there were no beginning inventories of direct materials and no beginning or ending work in process. Acton uses a JIT production system and backflush costing with three trigger points for making entries in the accounting system:
Purchase of direct materials
Completion of good finished units of product
Sale of finished goods
Acton’s August standard cost per meter is direct materials, $24, and conversion cost, $18. Acton has no direct materials variances. The following data apply to August manufacturing:
Direct materials purchased $540,000
Number of finished units manufactured 19,000
Conversion costs incurred $425,000
Number of finished units sold 18,000
- Prepare summary journal entries for August (without disposing of under- or overallocated conversion costs). Acton has no direct materials variances.
- Post the entries in requirement 1 to T-accounts for Materials and In-Process Inventory Control, Finished Goods Control, Conversion Costs Control, Conversion Costs Allocated, and Cost of Goods Sold.