Rove, Inc., produces headphones. The company received an order for 8,000 headphones. The company purchased and used

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Rove, Inc., produces headphones. The company received an order for 8,000 headphones. The company purchased and used $500,000 of materials for this order. The company incurred labor costs of $250,000 and overhead costs of $800,000. The company credits all costs to ‘‘Wages and Accounts Payable.’’

The accounting period ended before the company completed the order. The firm had 10 percent of the total costs incurred still in Work-in-Process Inventory and 20 percent of the total costs incurred still in Finished Goods Inventory.

a. Use T-accounts to show the flow of costs using backflush costing.

b. Use T-accounts to show the flow of costs using a traditional costing system.


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Managerial Accounting An Introduction to Concepts Methods and Uses

ISBN: 978-0324639766

10th Edition

Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil

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