Answer the following question(s)using the information below:
Complete Microfilm Products manufactures microfilm cameras.For October there were no beginning inventories of direct materials, and no beginning or ending work-in-process.Only one indirect manufacturing cost category is currently in use, "Conversion Costs." Journal entries are recorded when materials are purchased and when units are sold using backflush costing.
-A backflush costing system that journalizes only when raw materials are purchased and when finished goods are sold, will have which of the following results?
A)It will encourage managers to produce safety stock.
B)Conversion costs become period costs.
C)Income is increased if managers produce more output than is sold.
D)increased inventoriable costs
E)Produce more safety stock, and conversion costs become period costs.

Question

Answer the following question(s)using the information below:
Complete Microfilm Products manufactures microfilm cameras.For October there were no beginning inventories of direct materials, and no beginning or ending work-in-process.Only one indirect manufacturing cost category is currently in use, "Conversion Costs." Journal entries are recorded when materials are purchased and when units are sold using backflush costing. 
-A backflush costing system that journalizes only when raw materials are purchased and when finished goods are sold, will have which of the following results?
A)It will encourage managers to produce safety stock. 
B)Conversion costs become period costs. 
C)Income is increased if managers produce more output than is sold. 
D)increased inventoriable costs 
E)Produce more safety stock, and conversion costs become period costs.

Quizplus · Accepted Answer

Under a backflush costing system, only journal entries for the purchase of raw materials and sale of finished goods are recorded. Consequently, all other costs, including conversion costs, become period costs and are expensed in the period in which they are incurred.

Answer the Following Question(s)using the Information Below