Question : 4) Backflush costing uses normal or standard costs. 5) A trigger : 1186162

 

4) Backflush costing uses normal or standard costs.

 

5) A trigger point refers to the inventory level at which a reorder is generated.

 

6) A firm using a backflush costing system will always use actual costs rather than standard costs.

 

7) The “flush” in backflush refers to the fact that there are no variances in a backflush costing system using standard costs.

 

8) Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.

 

9) A positive aspect of backflush costing is the presence of the visible audit trail.

10) Traditional budgeted and standard costing systems use

A) backflush costing.

B) delayed costing.

C) post-deduct costing.

D) synchronous tracking.

E) variable costing.

 

Use the information below to answer the following question(s).

 

Fun ‘N’ Games manufactures various board games. For January 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 conversion costs are allocated under backflush costing.

 

Actual Conversion costs – January

$400,000

Direct materials purchased – January

$1,070,000

Units produced – January

58,800

Units sold – January

41,800

 

11) Which of the following journal entries properly records the purchase of direct materials?

A)

Accounts Payable Control

$1,070,000

        Inventory: Raw and in Process Control

$1,070,000

 

B)

Inventory: Raw and in Process Control

$1,070,000

        Accounts Payable Control

$1,070,000

 

C)

Inventory: Raw and in Process Control

$1,070,000

        Conversion Costs

$1,070,000

 

D)

Conversion Costs

$1,070,000

       Inventory: Raw and in Process Control

$1,070,000

 

E)

Accounts Payable Control

$1,070,000

        Finished Goods Inventory

$1,070,000

 

12) Which of the journal entries properly records the incurrence of conversion costs?

A)

Conversion Costs

$400,000

        Various accounts

$400,000

 

B)

Various accounts

$400,000

        Conversion Costs

$400,000

 

C)

Conversion Costs

$400,000

        Inventory: Direct Materials

$400,000

 

D)

Inventory: Direct Materials

$400,000

        Conversion Costs

$400,000

 

E)

Cost of Goods Sold

$400,000

        Conversion Costs

$400,000

 

13) Which of the following entries properly records the cost of goods sold for the month?

A)

Finished Goods control

$1,045,000

        Work in Process

$1,045,000

 

B)

Cost of Goods Sold

$1,045,000

        Finished Goods control

$1,045,000

 

C)

Finished Goods control

$1,045,000

        Cost of Goods Sold

$1,045,000

 

D)

Cost of Goods Sold

$1,045,000

        Work in Process

$1,045,000

 

E)

Cost of Goods Sold

$1,045,000

        Conversion costs control

$1,045,000