Answered: Kuchen Manufacturing uses backflush…

Name: Kuchen Manufacturing uses backflush costing to account for an electron
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Kuchen Manufacturing uses backflush costing to account for an electronic meter it makes. During August 2008, the firm produced 16,000 meters of which it sold 15,800. The standard cost for each meter is: Direct material

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kuchen Manufacturing uses backflush costing to account for an electronic meter it makes. During August 2008, the firm produced 16,000 meters of which it sold 15,800. The standard cost for each meter is:

Direct material P 20

Conversion costs 44

Total P 64

Assume that the company had no inventory on August 1. The following event took place in August:

Purchased P320,000 of direct materials.
Incurred P708,000 of conversion costs.
Applied P704,000 of conversion costs to Raw and In Process Inventory.
Finished 16,000 meters.
Sold 15,800 meters for P100 each.

Amount of Cost of Goods Sold after the adjustment of over-under applied conversion cost:

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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