Question 1

Vision Enterprises manufactures converter boxes for high definition TVs. All processing is initiated when an order is received. For March there were no beginning inventories. Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct Materials are purchased under a just-in-time system. Backflush costing is used with a finished goods trigger point. Additional information is as follows:
  Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used.

Accepted Answer

The answer of Vision Enterprises manufactures converter boxes for high...

Question 2

Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
 
-Which of the following journal entries properly records the purchase of direct materials?

Accepted Answer

The answer of Answer the following questions using the information...

Question 3

A trigger point refers to the inventory level at which a reorder is generated.

Accepted Answer

A trigger point in inventory management is not specifically the inventory level for reorder; it is often referred to as a reorder point, which is the specific level of inventory at which a new order is placed to replenish stock.

Question 4

The "flush" in backflush refers to the fact that there are no variances in a backflush costing system using standard costs.

Accepted Answer

Backflush costing can still result in variances between actual and standard costs, as it simplifies the accounting process by delaying the recording of costs until after production is complete.

Question 5

A firm using a backflush costing system will always use actual costs rather than standard costs.

Accepted Answer

A firm using a backflush costing system can use standard costs as well as actual costs.

Question 6

A positive aspect of backflush costing is the presence of the visible audit trail.

Accepted Answer

In backflush costing, the visible audit trail diminishes.

Question 7

Backflush costing is usually restricted to companies adopting JIT production methods.

Accepted Answer

The answer of Backflush costing is usually restricted to companies...

Question 8

Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.

Accepted Answer

Backflush costing is a method of costing that involves waiting until the end of a production period to calculate costs based on the number of products produced and the materials used. This approach is often used by companies that have fast manufacturing lead times because it allows them to quickly produce and sell products without worrying about tracking costs in real-time. While backflush costing can result in slightly different cost numbers than sequential costing, companies with fast lead times often find that the difference is negligible, and that backflush costing is a more efficient approach for their operations.

Question 9

A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called:

Accepted Answer

The described costing system is known as backflush costing, which defers the recording of costs until the production process is completed and then "flushes" all of the costs through the system in a single journal entry, typically triggered by the sale of finished goods. This approach can be useful for simplifying accounting processes and reducing transactional costs, but may also sacrifice some level of detailed cost tracking and accountability. The other answer choices (dependent costing, synchronous costing, sequential costing) do not accurately describe the described cost accounting methodology.

Question 10

Answer the following questions using the information below:
Complete Digital Products manufactures digital cameras. For October, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when units are sold.
 
-Which of the following journal entries would be recorded when units are sold for the month?

Accepted Answer

The journal entry for when units are sold would include a debit to Cost of Goods Sold and a credit to Finished Goods Inventory. Choice B is the only journal entry listed that includes both of these accounts.

Question 11

Tornado Electronics manufactures stereos. All processing is initiated when an order is received. For April there were no beginning inventories. Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct Materials are purchased under a just-in-time system. Backflush costing is used with a finished goods trigger point. Additional information is as follows:
  Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used.

Accepted Answer

The answer of Tornado Electronics manufactures stereos. All processing is...

Question 12

In a backflush-costing system, no record of work in process appears in the accounting records.

Accepted Answer

In a backflush-costing system, the accounting records do not include any work in process (WIP) inventory accounts. Instead, costs are charged directly to finished goods inventory when the production is completed. As a result, this system can be more efficient because it reduces the amount of recordkeeping required. However, it can also be less accurate because there is no way to track the costs of individual items as they move through the production process.

Question 13

Answer the following questions using the information below:
Complete Digital Products manufactures digital cameras. For October, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when units are sold.
 
-Which of the following journal entries properly reflects the purchase of materials in a JIT environment?

Accepted Answer

The answer of Answer the following questions using the information...

Question 14

Answer the following questions using the information below:
Complete Digital Products manufactures digital cameras. For October, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when units are sold.
 
-Which of the following entries would occur if the only trigger point is the production of finished units?

Accepted Answer

The answer of Answer the following questions using the information...

Question 15

Companies that would benefit from backflush costing include companies:

Accepted Answer

The answer of Companies that would benefit from backflush costing...

Question 16

Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
 
-Which of the following entries properly records the cost of goods sold for the month?

Accepted Answer

The cost of goods sold for the month can be calculated as follows:
Beginning Balance of Finished Goods + Cost of Goods Manufactured - Ending Balance of Finished Goods = Cost of Goods Sold
Since there were no beginning and ending inventories of work in process, the cost of goods manufactured is the total cost incurred during the month, which is the sum of the direct materials used and conversion costs allocated.
Option B records the allocation of conversion costs to the cost of goods manufactured account, which is the correct way to record it under backflush costing. Therefore, Option B is the best choice for recording the cost of goods sold for the month.

Question 17

The implications of JIT and backflush costing systems for activity-based costing systems include:

Accepted Answer

JIT and backflush costing systems focus on reducing inventory and only assigning costs once goods are completed, leading to a higher proportion of direct costs. This, in turn, reduces the amount of overhead costs that need to be allocated, making activity-based costing more effective. Therefore, both choices A and B are correct.

Question 18

Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods.

Accepted Answer

Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods, making it a true statement.

Question 19

Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
 
-Which of the journal entries properly records conversion costs?

Accepted Answer

The answer of Answer the following questions using the information...

Question 20

Traditional normal and standard costing systems use:

Accepted Answer

Traditional normal and standard costing systems use sequential tracking to assign costs to products. This involves tracing direct costs to products and allocating indirect costs based on a predetermined overhead rate. Backflush costing, delayed costing, and post-deduct costing are not commonly used in traditional costing systems.

Quiz 20: Inventory Management, Just-In-Time, and Simplified Costing Methods

A trigger point refers to the inventory level at which a reorder is generated.

The "flush" in backflush refers to the fact that there are no variances in a backflush costing system using standard costs.

A firm using a backflush costing system will always use actual costs rather than standard costs.

A positive aspect of backflush costing is the presence of the visible audit trail.

Backflush costing is usually restricted to companies adopting JIT production methods.

Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.

A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called:

In a backflush-costing system, no record of work in process appears in the accounting records.

Companies that would benefit from backflush costing include companies:

The implications of JIT and backflush costing systems for activity-based costing systems include:

Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods.

Traditional normal and standard costing systems use: