Backflush Costing For work done during August, Ohir Company incurred direct mate
ID: 2421845 • Letter: B
Question
Backflush Costing
For work done during August, Ohir Company incurred direct materials costs of $120,000 and conversion costs of $260,000. The company employs a JIT operating philosophy and backflush costing. At the end of August, the Work in Process Inventory account had been assigned $900 of costs, and the ending balance of the Finished Goods Inventory account was $1,300. There were no beginning inventory balances.
How much was charged to the Cost of Goods Sold account during August?
What was the ending balance of that account?
Backflush Costing
For work done during August, Ohir Company incurred direct materials costs of $120,000 and conversion costs of $260,000. The company employs a JIT operating philosophy and backflush costing. At the end of August, the Work in Process Inventory account had been assigned $900 of costs, and the ending balance of the Finished Goods Inventory account was $1,300. There were no beginning inventory balances.
How much was charged to the Cost of Goods Sold account during August?
What was the ending balance of that account?
Explanation / Answer
Direct materials costs = $120,000
Conversion costs = $260,000.
Process Inventory account had been assigned = $900 of costs,
Ending balance of the Finished Goods Inventory account = $1,300.
cost of good manufactured = direct material cost + conversion cost
= 120000 + 260000
= 381300
Amount charged to the Cost of Goods Sold account during August = 224545.50
Ending balance of that account = 381300 - 224545.50
= 156754.50
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