Companies that utilize backflush costing typically prorate underallocated or overallocated conversion costs between work-in-process, finished goods, and cost of goods sold.

Question

Quizplus · Accepted Answer

Companies that use backflush costing typically have low inventories so that prorating underallocated or overallocated conversion costs between work in process, finished goods, and cost of goods sold is seldom necessary.

Companies That Utilize Backflush Costing Typically Prorate Underallocated or Overallocated