Backflush costing is a costing method that:
A)Charges current production costs directly to finished goods inventory.
B)Charges past production costs directly to finished goods inventory.
C)Charges current production costs using actual costs incurred.
D)Charges current production cost directly to work-in-process inventory.

Question

Quizplus · Accepted Answer

Backflush costing is a method of cost accounting that charges the current production costs directly to the finished goods inventory without considering the specific costs incurred for producing a particular unit or batch of the product. Therefore, option A is correct, which charges the current costs to the finished goods inventory, helping to simplify the accounting process by reducing the number of transactions and lessening the burden of record-keeping requirements. This method is ideal for companies that produce a high volume of identical products and don't require a high level of detail regarding the cost of production.

Backflush Costing Is a Costing Method That