Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year: 1. Purchased raw materials on account for $600,000.2. Placed all materials received into production. 3. Incurred actual direct labor costs of $90,000.4. Incurred actual overhead costs of $625,000.5. Applied conversion costs of $675,000.6. Completed all work for the month.7. Sold all completed work.8. Computed the difference between actual and applied costs.Required:1. Prepare the journal entries for traditional and backflush costing. For backflush costing,assume there are two trigger points: (1) the purchase of raw materials, and (2) the completion of the goods. 2. Assume the second trigger point in Requirement 1 is the sale of goods. What would changefor the backflush-costing journal entries?3. What if there is only one trigger point and it is (a) completion of the goods or (b) sale of the goods?How would the backflush-costing journal entries differ from Requirement 1 for (a) and (b)?
Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year:
1. Purchased raw materials on account for $600,000.
2. Placed all materials received into production.
3. Incurred actual direct labor costs of $90,000.
4. Incurred actual
5. Applied conversion costs of $675,000.
6. Completed all work for the month.
7. Sold all completed work.
8. Computed the difference between actual and applied costs.
Required:
1. Prepare the
2. Assume the second trigger point in Requirement 1 is the sale of goods. What would change
for the backflush-costing journal entries?
3. What if there is only one trigger point and it is (a) completion of the goods or (b) sale of the goods?
How would the backflush-costing journal entries differ from Requirement 1 for (a) and (b)?
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