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    23 Backflush Costing and JIT Production

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    Jasmine Wong
    1. The document describes a company using backflush costing and JIT production. It records transactions for purchases of direct materials, conversion costs, completion of finished goods, and sale of finished goods. 2. A chart shows how inventory and cost accounts change with each transaction. For example, direct materials are initially recorded in Inventory, and later transferred to Cost of Goods Sold upon product sale. 3. Under pure JIT, inventory balances would be zero at each stage, with no direct materials stockpile and finished goods production exactly equaling sales each day.

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    23 Backflush Costing and JIT Production

    Uploaded by

    Jasmine Wong
    82 views7 pages
    1. The document describes a company using backflush costing and JIT production. It records transactions for purchases of direct materials, conversion costs, completion of finished goods, and sale of finished goods. 2. A chart shows how inventory and cost accounts change with each transaction. For example, direct materials are initially recorded in Inventory, and later transferred to Cost of Goods Sold upon product sale. 3. Under pure JIT, inventory balances would be zero at each stage, with no direct materials stockpile and finished goods production exactly equaling sales each day.

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    1. The document describes a company using backflush costing and JIT production. It records transactions for purchases of direct materials, conversion costs, completion of finished goods, and sale of finished goods. 2. A chart shows how inventory and cost accounts change with each transaction. For example, direct materials are initially recorded in Inventory, and later transferred to Cost of Goods Sold upon product sale. 3. Under pure JIT, inventory balances would be zero at each stage, with no direct materials stockpile and finished goods production exactly equaling sales each day.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    82 views7 pages

    23 Backflush Costing and JIT Production

    Uploaded by

    Jasmine Wong
    1. The document describes a company using backflush costing and JIT production. It records transactions for purchases of direct materials, conversion costs, completion of finished goods, and sale of finished goods. 2. A chart shows how inventory and cost accounts change with each transaction. For example, direct materials are initially recorded in Inventory, and later transferred to Cost of Goods Sold upon product sale. 3. Under pure JIT, inventory balances would be zero at each stage, with no direct materials stockpile and finished goods production exactly equaling sales each day.

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    of 7

    -23 (30 min.

    ) Backflush costing and JIT production

    1.

    (a) Purchases of direct materials Inventory: Direct and In-Process Control 2,754,000

    Accounts Payable Control 2,754,000

    (b) Incur conversion costs Conversion Costs Control 723,600

    Various Accounts 723,600

    (c) Completion of finished goods Finished Goods Controla 3,484,000

    Inventory: Direct and In-Process Control 2,733,600

    Conversion Costs Allocated 750,400

    (d) Sale of finished goods Cost of Goods Soldb 3,432,000

    Finished Goods Control 3,432,000

    a. 26,800 ($102 + $28) = $3,484,000

    b. 26,400 ($102 + $28) = $3,432,000

    20-23 (Contd.)

    2.


    Inventory: Finished Goods
    Cost of Goods Sold
    Direct and In-Process Control Control

    (a) 2,754,000 (c) 2,733,600 (c) 3,484,000 (d) 3,432,000 (d) 3,432,000
    Direct
    Bal. 20,400 Bal. 52,000
    Materials

    Conversion Costs Allocated


    (c) 750,400

    Conversion
    Conversion Costs Control
    Costs (b) 723,600

    3. Under an ideal JIT production system, there could be zero inventories at the end of each day. Entry
    (c) would be $3,432,000 finished goods production, not $3,484,000. Also, there would be no inventory
    of direct materials instead of $2,754,000 $2,733,600 = $20,400
    20-24 (20 min.) Backflush costing, two trigger points (continuation of 23)

    1.

    (a) Purchases of direct materials Inventory Control 2,754,000

    Accounts Payable Control 2,754,000

    (b) Incur conversion costs Conversion Costs Control 723,600

    Various Accounts 723,600

    (c) Completion of finished goods No entry

    (d) Sale of finished goods Cost of Goods Sold 3,432,000

    Inventory Control 2,692,800

    Conversion Costs Allocated 739,200

    (e) Under/Over Allocated Conversion Costs Allocated 739,200

    Conversion Costs Costs of Goods Sold 15,600

    Conversion Costs Control 723,600

    2.

    Inventory Control Cost of Goods Sold


    (a) 2,754,000 (d) 2,692,800 (d) 3,432,000 (e) 15,600
    Direct
    Bal. 61,200
    Materials

    Conversion Costs Allocated


    (e) 739,200 (d) 739,200

    Conversion
    Conversion Costs Control
    Costs (b) 723,600 (e) 723,600
    20-33 (20 min.) Blackflush costing and JIT production

    1.

    (a) Purchases of direct materials Inventory: Direct and In-Process Control 550000

    Accounts Payable Control 550000

    (b) Incur conversion costs Conversion Costs Control 440000

    Various Accounts 440000

    (c) Completion of finished goods Finished Goods Controla 945000

    Inventory: Direct & In-Process Control 525000

    Conversion Costs Allocated 420000

    (d) Sale of finished goods Cost of Goods Soldb 900000

    Finished Goods Control 900000


    a
    21000 $45 ($25 + $20) = $945000
    b
    20000 $45 = $900000

    2.

    Inventory
    Direct and In-Process Control Finished Goods Control Cost of Goods Sold
    Direct ( a ) 550,000 (c ) 525,000 (c) 945,000 (d) 900,000 (d) 900,000
    Materials
    Bal. 25,000 Ba l. 45,000

    Conversion Costs Allocated


    (c) 420,000
    Conversion
    Costs
    Conversion Costs Control
    (b) 440,000
    20-34 (20 min.) Backflush costing, two trigger points (continuation of 33)

    1.

    (a) Purchases of direct materials Inventory Control 550,000

    Accounts Payable Control 550,000

    (b) Incur conversion costs Conversion Costs Control 440,000

    Various Accounts

    (such as Accounts Payable

    Control and Wages Payable) 440,000

    (c) Completion of finished No entry

    goods

    (d) Sale of finished goods Cost of Goods Sold 900,000

    Inventory Control 500,000

    Conversion Costs Allocated 400,000

    (e) Under/Over Allocated Conversion Costs Allocated 400,000

    Conversion Costs Cost of Goods Sold 40,000

    Conversion Costs Control 440,000

    2.
    Inventory Control Cost of Goods Sold

    Direct (a)550000 (d) 500000 (d) 900000

    Materials Bal.50000

    Conversion Costs Allocated

    (e) 400000 (d) 400000


    Conversion
    (e) 40000
    Costs
    Conversion Costs Control

    (b) 440000 (e) 440000

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