In backflush costing, any remaining balance in the conversion costs account at the end of an accounting period is charged to
A) Cost of Goods Sold.
B) Work-in-process.
C) Finished Goods Inventory.
D) Cost of Goods Sold, WIP and Finished Goods Inventory proportionately.

Question

Quizplus · Accepted Answer

In backflush costing, conversion costs are not assigned to individual products or production stages until the end of the production process. Any remaining balance in the conversion costs account at the end of an accounting period is charged to Cost of Goods Sold. This is because backflush costing assumes that all products and production stages consume the same amount of conversion costs, so any remaining balance is simply a result of overestimating the amount of conversion costs needed for the period.

In Backflush Costing, Any Remaining Balance in the Conversion Costs