Backflush costing provides reasonably accurate product costs if
A) materials inventories are high and production cycle times are short.
B) materials inventories are low and production cycle times are short.
C) materials inventories are low and production cycle times are long.
D) materials inventories are high and production cycle times are long.

Question

Quizplus · Accepted Answer

Backflush costing assumes that raw material is consumed only when the finished goods are produced. This method is suitable for companies with low inventory levels and short production cycle times as it eliminates the need for frequent material requisitions and reduces paperwork. This leads to reasonably accurate product costs by only recording materials when they are used in production.

Backflush Costing Provides Reasonably Accurate Product Costs If