Chapter 19, Problem 28E

Lally, Inc. produces universal remote controls. Lally uses a JIT costing system. One of the company’s products has a standard direct materials cost of $9 per unit and a standard conversion cost of $35 per unit. During January 2018, Lally produced 500 units and sold 495 units on account at $45 each. It purchased $4,800 of direct materials on account and incurred actual conversion costs totaling $14,000.

Requirements

1. 1. Prepare summary journal entries for January.
2. 2. The January 1, 2018, balance of the Raw and In-Process Inventory account was $70. Use a T-account to find the January 31 balance.
3. 3. Use a T-account to determine whether conversion costs are overallocated or underallocated for the month. By how much? Prepare the journal entry to adjust the Conversion Costs account.