Blaster began operations in June 20XX. Blaster manufactures vehicle seat covers

Question

Blaster began operations in June 20XX. Blaster manufactures vehicle seat covers using a just-in-time production system supported by a backflush costing system. This system has two trigger points: (1) the purchase of raw materials, and (2) the sale of finished good units. Standard unit costs are $40 for raw materials and $25 for conversion costs. Blaster writes off any underallocated or overallocated conversion costs immediately. The following data were available for June 20XX.

Production of good units 19,800

Sales of good units 19,750

Purchases of raw materials [20,000 units at $40] $800,000

Conversion costs incurred $496,000

The June ending total for all inventory balances is

a. $16,250.

b. $12,250.

c. $11,250.

d. $10,000.

Explanation / Answer

Inventory balance= Numbers of units * cost per unit = (19800-19750)*(40+25) = 16250

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