Reference no: EM132680556

Assume that Absolute Company uses JIT costing for the production of goods during the month of January. All conversion costs are charged to the cost of goods sold account. At the end of each month, all inventory account balances are adjusted. Raw material cost is backflushed from RIP to Finished Goods and from Finished Goods to Cost of Goods Sold. The following transactions summarize the major steps in Absolute's production during the month of January.

1. Raw materials received from suppliers amounted to $4,000.

2. Direct labor costs of $10,400 and overhead costs of $7,800 were incurred and applied, respectively during the month of January.

3. The cost of Raw and in Process at January 31 was $3,600. This cost was determined through the production report and is composed of the following elements:

Direct Materials $ 1,500

Direct Labor 1,200

Overhead 900

In addition, assume that finished goods inventory at January 31, was $6,500 consisting of:

Direct Materials $ 1,500

Direct Labor 2,850

Overhead 2,150

Required:

Problem 1. Prepare all the necessary journal entries for the following transactions.

Problem 2. Determine the amount of materials to backflushed from RIP to Finished Goods.

Problem 3. Determine the amount of materials to backflushed from Finished Goods to Cost of Goods sold.

Problem 4. Determine the amount to be adjusted to RIP and Finished Goods with respect to conversion costs.

Problem 5. Determine the amount of cost of goods sold.