Training Company uses a backflush-costing system to produce bicycles.Bicycles are scheduled for production only after orders are recorded, and products are shipped to customers immediately upon completion.No finished goods inventory is maintained and product costs are applied directly to cost of goods sold.Standard cost for materials and conversion is $150 and $75, respectively. During the current month, Training Company purchased $6,000 of direct materials and incurred $3,300 in conversion cost to produce 40 units.The entry to apply cost to completed goods includes a debit to _____.
A)Finished-Goods Inventory for $9,300
B)Work-in-Process Inventory for $9,000
C)Cost of Goods Sold for $9,300
D)Cost of Goods Sold for $9,000

Question

Quizplus · Accepted Answer

Since there is no finished goods inventory, the cost of completed goods is applied directly to cost of goods sold. Therefore, the entry to apply cost to completed goods would include a debit to Cost of Goods Sold for $9,000 (40 units x ($150 + $75) = $9,000).

Training Company Uses a Backflush-Costing System to Produce Bicycles