Which of the following statements is true of a backflush costing system?
A) All costs are tracked sequentially as products pass through each stage of production.
B) When inventories are minimal, as in JIT production systems, backflush costing complicates costing systems.
C) Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP
D) Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process.

Question

Quizplus · Accepted Answer

Backflush costing simplifies the accounting process, especially in environments with minimal inventories like JIT systems, by delaying the recording of costs until the completion of goods. This approach may not align with GAAP's absorption costing rules, which require allocating all manufacturing costs to products as they are incurred.

Which of the Following Statements Is True of a Backflush