accounting help

week4_lab1.xlsx

Problem 1

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, the account balances were Raw and in-process inventory, $7,000; Finished goods inventory, $2,200. The standard cost of a jacket is $37, comprised of $13 direct materials plus $24 conversion costs. Data for February's activities follow:
Number of jackets completed	20,000	Direct materials purchased	$257,500
Number of jackets sold	19,600	Conversion costs incurred	$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 sold monthly.
3. Use a T-account to determine the February 29, 2012, balance of Raw and in-process inventory.

Christi, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Christi's senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the 2-year life of the skateboards follow. Also shown are the cost allocation rates for each activity.
Activity	Predicted Reduction in Activity Units	Activity Cost Allocation Rate Per Unit
Inspection of incoming materials	420	$37
Inspection of finished goods	420	26
Number of defective units discovered in-house	1,400	56
Number of defective units discovered by customers	325	75
Lost sales to dissatisfied customers	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" quality activity?
3. What major difficulty would Christi's managers have in implementing this cost-of-quality approach? What alternative approach could they use to measure quality improvement?