Objective 20.7
1) Traditional normal and standard costing systems use ________.
A) backflush costing
B) delayed costing
C) variable tracking
D) sequential tracking
2) A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called ________.
A) dependent costing
B) synchronous costing
C) sequential costing
D) backflush costing
3) Which of the following statements best defines backflush costing system?
A) an integrated costing system covering a company’s accounting, distribution, manufacturing, purchasing, human resources, and other functions
B) a costing system that omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods
C) a push-through system in which each component in a production line is produced immediately as needed by the next step in the production line
D) a costing system that comprises a single database that collects data and feeds it into software applications supporting all of a company’s business activities
Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
Conversion costs — March$ 400,000
Direct materials purchased — March$1,070,000
Units produced — March58,800
Units sold — March41,800
4) Which of the following journal entries properly records the purchase of direct materials?
A) Accounts Payable Control1,070,000
Inventory: Raw and In-Process Control1,070,000
B) Inventory: Raw and In-Process Control1,070,000
Accounts Payable Control1,070,000
C) Inventory: Raw and In-Process Control1,070,000
Conversion Costs1,070,000
D) Conversion Costs1,070,000
Inventory: Raw and In-Process Control1,070,000
5) Which of the journal entries properly records conversion costs?
A) Conversion Costs400,000
Various Accounts400,000
B) Various Accounts400,000
Conversion Costs400,000
C) Conversion Costs400,000
Inventory: Direct Materials400,000
D) Inventory: Direct Materials400,000
Conversion Costs400,000
6) Which of the following entries properly records the cost of goods sold for the month?
A) Finished Goods1,045,000
Work in Process1,045,000
B) Cost of Goods Sold1,045,000
Finished Goods1,045,000
C) Finished Goods1,045,000
Cost of Goods Sold1,045,000
D) Cost of Goods Sold1,045,000
Work in Process1,045,000
Answer the following questions using the information below:
Vision Company manufactures digital cameras. For May, there were no beginning inventories of direct materials and no beginning or ending work-in -process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when units are sold.
Conversion costs – May$ 100,625
Direct materials purchased – May$253,575
Units produced – May80,500 units
Units sold – May77,500 units
Selling price$20 each
7) Which of the following journal entries properly reflects the purchase of materials under backflush costing?
A) Inventory Control$253,575
Accounts Payable Control$253,575
B) Accounts Payable Control$253,575
Allocated Costs: Direct Materials$253,575
C) Accounts Payable Control$253,575
Materials Inventory$253,575
D) Allocated Costs: Direct Materials$253,575
Inventory: Raw and Material$253,575
8) Which of the following journal entries would be recorded when units are sold for the month under backflush costing? ?
A) Cost of Goods Sold$341,000
Inventory: Raw and In-Process$341,000
B) Cost of Goods Sold$341,000
Inventory Control$244,125
Conversion Costs Allocated$96,875
C) Inventory Inventory Control$244,125
Conversion Costs Allocated$96,875
Cost of Goods Sold$341,000
D) Cost of Goods Sold$354,200
Inventory: Raw and In-Process$253,575
Conversion Costs Allocated$96,875
9) If the two trigger points are completion of good finished units of product and sale of finished goods, which of the following entries would be used to record cost of finished units completed under backflush costing?
A) Finished Goods$341,000
Inventory Control$244,125
Conversion Costs Allocated$96,875
B) Finished Goods$354,200
Inventory: Raw Materials$253,575
Conversion Costs Allocated$100,625
C) Finished Goods$354,200
Accounts Payable Control$253,575
Conversion Costs Allocated$100,625
D) Inventory Inventory Control$244,125
Conversion Costs Allocated$96,875
Finished Good$341,000
10) Under backflush costing approach, the purchase of materials is ________.
A) credited to the Materials and In-Process Inventory Control account
B) debited to the Materials and In-Process Inventory Control account
C) debited to the Materials Inventory Control account
D) credited to the Materials Inventory Control account
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