High Point produces fleece jackets. The company uses JIT costing for its JIT production system. High Point has two inventory accounts: Raw and in-process inventory and Finished goods inventory. On February 1, 2012, inventory, $2,200. The standard cost of a jacket is $37, comprised of $13 direct materials plus $24 conversion costs. Data for February's activ Number of jackets completed Number of jackets sold 20,000 Direct materials purchased 19,600 Conversion costs incurred $257,500 $580,000 Requirements: 1. What are the major features of a JIT production system such as that of High Point? 2. Prepare summary journal entries for February. Under- or over-allocated conversion costs are closed to Cost of goods so 3. Use a T-account to determine the February 29, 2012, balance of Raw and in-process inventory. em. nventory. On February 1, 2012, the account balances were Raw and in-process inventory, $7,000; Finished goods costs. Data for February's activities follow: s are closed to Cost of goods sold monthly. ntory. Christi, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Christi's senio internal failure, and external failure activities. The predicted reductions in activities over the 2-year life of the skateboards activity. Activity Inspection of incoming materials Inspection of finished goods Number of defective units discovered in-house Number of defective units discovered by customers Lost sales to dissatisfied customers Predicted Reduction Activity Cost Allocation in Activity Units Rate Per Unit 420 $37 420 26 1,400 56 325 75 150 103 Requirements: 1. Calculate the predicted quality cost savings from the design engineering work. 2. Christi spent $103,000 on design engineering for the new skateboard. What is the net benefit of this "preventive" qualit 3. What major difficulty would Christi's managers have in implementing this cost-of-quality approach? What alternative ap a new skateboard. Christi's senior managers expect the engineering work to reduce appraisal, e 2-year life of the skateboards follow. Also shown are the cost allocation rates for each enefit of this "preventive" quality activity? approach? What alternative approach could they use to measure quality improvement?
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