Question

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 back flush-costing journal entries?
3. What if there is only one triggerpointanditis(a)completionofthegoodsor(b)saleofthegoods? How would the back flush-costing journal entries differ from Requirement1for (a) and (b)?


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  • CreatedSeptember 01, 2015
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