Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

تمرين 1

Backflush Costing
Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year:
1. Purchased raw materials on account for $600,000.
2. Placed all materials received into production.
3. Incurred actual direct labor costs of $90,000.
4. Incurred actual overhead costs of $625,000.
5. Applied conversion costs of $675,000.
6. Completed all work for the month.
7. Sold all completed work.
8. Computed the difference between actual and applied costs.
Required:
1. Prepare the journal entries for traditional and backflush costing. For backflush costing, assume there are two trigger points: (1) the purchase of raw materials, and (2) the completion of the goods.
2. Assume the second trigger point in Requirement 1 is the sale of goods. What would change for the backflush-costing journal entries?
3. What if there is only one trigger point and it is (a) completion of the goods or (b) sale of the goods? How would the backflush-costing journal entries differ from Requirement 1 for (a) and (b)?