Question: Assume the same facts as in Exercise 20 22 except that

Assume the same facts as in Exercise 20-22, except that Grand Devices now uses a backflush costing system with the following two trigger points:
In Exercise 20-22, There are no beginning inventories of materials or finished goods and no beginning or ending work-in-process inventories. The following data are for August 2013:
Direct materials purchased ...... $ 2,958,000
Conversion costs incurred ....... $ 777,600
Direct materials used ......... $ 2,937,600
Conversion costs allocated ...... $ 806,400
Grand Devices records direct materials purchased and conversion costs incurred at actual costs. It has no direct materials variances. When finished goods are sold, the backflush costing system “ pulls through” standard direct material cost ($ 102 per unit) and standard conversion cost ($ 28 per unit). Grand Devices produced 28,800 finished units in August 2013 and sold 28,400 units. The actual direct material cost per unit in August 2013 was $ 102, and the actual conversion cost per unit was $ 27.
Purchase of direct materials and incurring of conversion costs
Sale of finished goods
The Inventory Control account will include direct materials purchased but not yet in production, materials in work in process, and materials in finished goods but not sold. No conversion costs are inventoried. Any under-or overallocated conversion costs are written off monthly to Cost of Goods Sold.

1. Prepare summary journal entries for August, including the disposition of under-or overallocated con-version costs.
2. Post the entries in requirement 1 to T-accounts for Inventory Control, Conversion Costs Control, Conversion Costs Allocated, and Cost of Goods Sold.

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  • CreatedMay 14, 2014
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