Question 1

Which of the following statements best defines a trigger point in a sequential-tracking costing system?
A)the inventory level at which a new purchase order is generated
B)the point at which the sum of annual relevant stockout and ordering costs is minimal
C)the production level at which the costing system becomes incapable of tracking the production costs
D)a stage in the production cycle at which journal entries are made in the accounting system

Accepted Answer

The answer of Which of the following statements best defines...

Question 2

Corry Corporation manufactures filters for cars,vans,and trucks.A backflush costing system is used and standard costs for a filter are as follows:
  
Filters are scheduled for production only after orders are received,and are shipped immediately upon completion.This results in product costs being charged directly to cost of goods sold.In December,3,000 filters were produced and shipped.Materials were purchased at a cost of $8,450 and actual conversion costs of $13,650 were recorded.
Required:
Prepare journal entries to record December's costs for the production of the filters.

Accepted Answer

The answer of Corry Corporation manufactures filters for cars,vans,and trucks.A...

Question 3

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.

Which of the following journal entries would be recorded when units are sold for the month under backflush costing? Please round intermediate calculations to two decimal places (i.e. ,unit costs)

Accepted Answer

The answer of Vision Company manufactures digital cameras.For May,there were...

Question 4

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

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.

Question 5

The accounting procedures in a backflush-costing system strictly adhere to Generally Accepted Accounting Principles (GAAP).

Accepted Answer

The accounting procedures in a backflush-costing system do not strictly adhere to Generally Accepted Accounting Principles (GAAP).

Question 6

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.

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

Accepted Answer

The answer of Games R Us manufactures various games.For March,there...

Question 7

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.

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

Accepted Answer

The answer of Games R Us manufactures various games.For March,there...

Question 8

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.

Which of the following journal entries properly reflects the purchase of materials under backflush costing?

Accepted Answer

The answer of Vision Company manufactures digital cameras.For May,there were...

Question 9

Companies that have low manufacturing lead time usually find that a version of backflush costing will report cost numbers totally different to what a sequential costing approach would report.

Accepted Answer

Companies that have low manufacturing lead time usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.

Question 10

The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is different under backflush costing and sequential tracking.

Accepted Answer

The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is exactly the same under backflush costing and sequential tracking.

Question 11

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

Accepted Answer

A firm using a backflush costing system can use standard costs as well as actual costs.

Question 12

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

Accepted Answer

In backflush costing,the visible audit trail diminishes.

Question 13

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.

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? (Round intermediate calculations to the nearest cent and final calculations to the nearest dollar. )

Accepted Answer

The answer of Vision Company manufactures digital cameras.For May,there were...

Question 14

Vision Enterprises manufactures converter boxes for high definition TVs.All processing is initiated when an order is received.For March there were no beginning inventories.Conversion Costs and Direct Materials are the only manufacturing cost accounts.Direct Materials are purchased under a just-in-time system.Backflush costing is used with a finished goods trigger point.Additional information is as follows:
  
Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used.

Accepted Answer

The answer of Vision Enterprises manufactures converter boxes for high...

Question 15

To comply with GAAP,backflush cost numbers can be adjusted by recording a journal entry.

Accepted Answer

Backflush costing is not a GAAP-approved method of costing, but if a company opts to use it, they need to make necessary adjustments to comply with GAAP. This can be achieved by recording a journal entry to adjust the cost numbers obtained through backflush costing.

Question 16

Under backflush costing approach where three trigger points are used (stage A,stage C,and stage D),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)ignored because the manufacturing process moves so quickly from acquisition of materials to the sale of the finished good

Accepted Answer

Under the backflush costing approach with trigger points, the purchase of materials is debited to the Materials and In-Process Inventory Control account at stage A. This is because the actual usage of materials is not recorded until stage C or D when the finished goods are produced. Therefore, the materials used are backed-flushed through the system and recorded at the trigger points. At stage C or D, the in-process inventory for materials is credited and the finished goods inventory is debited.

Question 17

Which of the following statements is true of a backflush costing system?
A)All costs are tracked sequentially as products pass through each stage of production.
B)When inventories are minimal,as in JIT production systems,backflush costing complicates costing systems.
C)Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP
D)Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process.

Accepted Answer

Backflush costing simplifies the accounting process, especially in environments with minimal inventories like JIT systems, by delaying the recording of costs until the completion of goods. This approach may not align with GAAP's absorption costing rules, which require allocating all manufacturing costs to products as they are incurred.

Question 18

In a backflush-costing system,no record of work in process appears in the accounting records.

Accepted Answer

In a backflush-costing system, inventory and work in process are not tracked and therefore no record of work in process appears in the accounting records. Instead, costs are only recorded when finished goods are produced or sold, and these costs are "flushed back" through the system to account for the raw materials and other inputs that were used.

Question 19

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.

Which of the journal entries properly records conversion costs?

Accepted Answer

The answer of Games R Us manufactures various games.For March,there...

Question 20

Tornado Electronics manufactures stereos.All processing is initiated when an order is received.For April there were no beginning inventories.Conversion Costs and Direct Materials are the only manufacturing cost accounts.Direct Materials are purchased under a just-in-time system.Backflush costing is used with a finished goods trigger point.Additional information is as follows:
  
Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used.

Accepted Answer

The answer of Tornado Electronics manufactures stereos.All processing is initiated...

Quiz 20: Inventory Management, just-In-Time, and Simplified Costing Methods

Which of the following statements best defines a trigger point in a sequential-tracking costing system?

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

The accounting procedures in a backflush-costing system strictly adhere to Generally Accepted Accounting Principles (GAAP).

Companies that have low manufacturing lead time usually find that a version of backflush costing will report cost numbers totally different to what a sequential costing approach would report.

The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is different under backflush costing and sequential tracking.

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

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

To comply with GAAP,backflush cost numbers can be adjusted by recording a journal entry.

Under backflush costing approach where three trigger points are used (stage A,stage C,and stage D) ,the purchase of materials is:

Which of the following statements is true of a backflush costing system?

In a backflush-costing system,no record of work in process appears in the accounting records.