Question

Backflush Costing

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 $560,000.
2. Placed all materials received into production.
3. Incurred actual direct labor costs of $84,000.
4. Incurred actual overhead costs of $583,400.
5. Applied conversion costs of $630,200.
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 costing.

1.
2.
3.
4.
5.
6.
7.
8.

Prepare the journal entries for backflush costing. Assume there are two trigger points: (1) the purchase of raw materials and (2) the completion of the goods. If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0". For a compound transaction, if an amount box does not require an entry, leave it blank.

1.
2.
3 & 4.
5.
6.
7.
8.

2. Assume the second trigger point in Requirement 1 is the sale of goods. If an amount box does not require an entry, leave it blank.

What would change for the backflush-costing journal entries?

  with the following entry.

3. Assume there is only one trigger point and it is (a) completion of the goods or (b) sale of goods. If an amount box does not require an entry, leave it blank.

How would the backflush costing journal entries differ from Requirement 1 for (a)?

  with the following entry.

How would the backflush costing journal entries differ from Requirement 1 for (b)? If an amount box does not require an entry, leave it blank.

  with the following entry.

Answer 1

ANSWER'- oves had al" cost $708,800 Aclual convosaion COS 102,000 108.a0o 810, 800 Debi $680,000 A ccamk paybb 80,000 680, o0d Raw material 68o, b00 64,000 Cenvensfion Cos 76 4000

nlases 108.000 cash 3102,000 carh 8,200 784, 600 Joumal toie nk thsh ai $680.0oo ba aw naraz Slo, 00 eonveasion cost 810,200

cost payblh Pay b