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Part I: Theory of Accounts

The document discusses Just-In-Time (JIT) systems and backflush costing. It provides information on JIT concepts and benefits, and describes backflush costing as a cost accounting method that speeds up accounting in a JIT environment with minimal inventory balances and variances. It then provides two problems involving companies that use backflush costing under a JIT system, asking questions about raw materials balances, cost of goods manufactured and sold, and trigger points for recording transactions.

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Janna Mari Frias
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579 views6 pages

Part I: Theory of Accounts

The document discusses Just-In-Time (JIT) systems and backflush costing. It provides information on JIT concepts and benefits, and describes backflush costing as a cost accounting method that speeds up accounting in a JIT environment with minimal inventory balances and variances. It then provides two problems involving companies that use backflush costing under a JIT system, asking questions about raw materials balances, cost of goods manufactured and sold, and trigger points for recording transactions.

Uploaded by

Janna Mari Frias
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Part I: Theory of Accounts

1.     Which of the following is/are true regarding Just-In-Time Systems?


a.      elimination of any production process that does not add value to the product
b.     performance efficiency
c.      reduction in total cost of production while increasing quality
d.     all of the above

2.     Statement 1: In a just-in-time (JIT) environment, the optimal situation is to have only one vendor for any giv
Statement 2: When a company adopts the just-in-time (JIT) system, the benefits from this system will immediat
a.      Statement 1 is TRUE and statement 2 is FALSE
b.     Statement 1 is FALSE and statement 2 is TRUE
c.      Both statements are TRUE
d.     Both statements are FALSE

3.    It is a cost accounting method that speeds up, simplifies, and minimizes accounting effort in an
environment that minimizes inventory balances, requires few allocations, and ideally uses standard costing
with minimal variances.
a.      Normal Costing
b.     Standard Costing
c.      Backflush Costing
d.     Activity Based Costing

4.     Under Backflush Costing, when the company purchases materials from the supplier, the journal entry to reco
a.      debit to Raw Materials Inventory account
b.     debit to Raw and In-Process account
c.      credit to Raw and In-Process account
d.     credit to Raw Materials Inventory account

5.     Backflush costing uses trigger points in recording the transactions, which of the following is not considered a
a.      Purchase
b.     Completion
c.      Sale
d.     All of them are trigger points

Part II: Problem Solving

Problem 1

Hublot Co. adopted the Just-In-Time (JIT) production system and used Backflush Costing to account the cost of the
Purchase of raw materials

Materials requisitioned into production

Direct labor

Factory overhead incurred

Applied factory overhead


Units produced
Units sold
There were no beginning inventories for raw materials, work-in-process, and finished goods.

1. What is the ending balance of the Raw and In-Process / Materials In-Process account?
a. 10,000
b. 20,000
c. 30,000
d. 0

Raw and In-Process, beg


Purchases
Raw and IN-Process, end
Materials and requisitioned into production/ finished goods

2.     What is the amount of the cost of goods manufactured?


a. 3,400,000
b. 3,380,000
c. 3,480,000
d. 3,500,000

3.     What is the amount of the cost of goods sold?


a. 3,332,000
b. 3,312,400
c. 3,430,000
d. 3,410,400

Direct Materials
Direct Labor
Applied OH
Total Cost for 50,000 completed units

Cost per completed unit


Cost of goods sold

Problem 2
Petronas Co. adopted the Just-In-Time (JIT) production system and used Backflush Costing. They also used a Raw
Beginning balance of RIP account
Materials purchased on account
Ending balance of RIP account

1.     What is the amount of materials that is backflushed from Raw and In-Process to Finished Goods?
a. 1,450,000
b. 1,550,000
c. 1,500,000
d. 1,400,000

Raw and In-Process, beg 50,000


Purchases 1,500,000
Raw and in-Process, end '(100,000)
Materials requistioned into production/ finished goods 1,450, 000

2. Assume the answer in No. 1 and the applied conversion cost amounting to P1,350,000 were for the
200,000 units completed. What is the cost of goods sold if only 180,000 units were sold?
a. 2,610,000
b. 2,565,000
c. 2,520,000
d. 2,475,000

Direct Materials 1,450,000


Applied Conversion cost 1,350,000
Total Cost for 200,000 completed units 2,800,000
÷ 200,000
14
x 180,000
Costs og goods sold 2,520,000
vendor for any given item.
em will immediately show in the company's performance.

urnal entry to record the transaction involves a

s not considered as a trigger point?

unt the cost of the produced goods. The following data were given:
P2,000,000

P1,980,000

P600,000

P800,000

P900,000
50,000
49,000

-
2,000,000
(20000)
1,980,000

1,980,000
600,000
900,000
3,480,000
÷ 50,000
69.60
x 49000
3,410,400

also used a Raw and In-Process account for the materials. The following data were given:
P50,000
P1,500,000
P100,000

shed Goods?

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