ACCA107

Quiz Backflush Costing, May 11, 2023

C. N. Dait

Name: ____________________________. Section: _________. Score: _____________

Good Luck!

Multiple Choice
Circle the letter that corresponds to the best answer.

1. Just-in-time (JIT) inventory systems

a. result in a greater number of suppliers for each production process.
b. focus on a “push” type of production system.
c. can only be used with automated production processes.
d. result in inventories being either greatly reduced or eliminated.

2. Compared to job order and process costing, backflush costing is notable for its lack of
detailed tracking of the cost of work-in-process

a. True
b. False

3. In Just-in-time systems, the velocity is so high that traditional accounting is impractical.

a. True
b. False

4. Raw-and-in-process inventory represents unprocessed raw materials.

a. True
b. False

5. In the entry to backflush raw materials from RIP to Finished Goods, the amount represents
the total cost of the goods completed during the period.
a. True
b. False

6. The JIT philosophy does not focus on

a. standardizing parts used in products.
b. eliminating waste in the production process.
c. finding the absolute lowest price for purchased parts.
d. improving quality of output

7. In a JIT system, the quality of each product begins with

a. a company’s vendors
b. employees
c. inspection of finished goods inventory
d. a good product warranty

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 ACCA107
Quiz Backflush Costing, May 11, 2023
C. N. Dait

Use the following information for Items 8 through 11.

Sander Company has a cycle time of 3 days, uses a Raw and In Process (RIP) account,
and charges all conversion costs to Cost of Goods Sold. At the end of each month, all
inventories are counted, their conversion costs components are estimated, and inventory
account balances are adjusted. Raw material cost is backflushed from RIP to Finished
Goods and from Finished Goods to Cost of Goods Sold. The following information is for
June:

RIP, beginning (includes P3,000 conversion cost) P29,250

8. What
FG, is the amount
beginning of raw
(includes materials
P10,000 backflushed
conversion cost) from RIP to FG? 30,000
Raw materials received on credit 562,500
Direct labor cost, P375,000; Factory overhead applied, 825,000
P450,000
RIP, ending (includes P4,500 conversion cost) 32,000
FG, ending (includes P8,750 conversion cost) 26,250
a. P561,000
b. P561,250
c. P562,500
d. P559,750

9. What is the amount of raw materials backflushed from FG to CGS?

a. P561,000
b. P563,750
c. P565,000
d. P566,250

10. To adjust the conversion cost component of the RIP ending balance and FG ending
balance, the entry will include

a. Debit to CGS P250

b. Credit to CGS P250
c. Debit to FG 1,250
d. Credit to RIP 1,500

11. What is the conversion costs of units sold in June?

a. P825,250
b. P825,000
c. P840,000
d. P824,750

Use the following information for Items 12 through 15.

Kaycee uses backflush costing to account for production costs of its products. During May
2023, the firm produced 75,000 units and sold 74,000 units. The standard cost for each product
is:

DM, P4: Conversion Cost, P8; Total cost per unit, P12

The firm had no inventory on May 1. The following events took place in May:

a) Purchased P306,000 of direct material.

b) Incurred P605,000 of conversion costs.
c) Applied P600,000 of conversion costs to Raw and In-Process Inventory.
d) Finished 75,000 units.
e) Sold 74,000 units for P20 each.

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 ACCA107
Quiz Backflush Costing, May 11, 2023
C. N. Dait

12. Production time is extremely short and raw materials purchase might not be journalized
until production is complete. At the trigger point which is completion, the entry will
involve debit to RIP at

a. 0
b. 6,000
c. 300,000
d. 306,000.
e. 900,000

13. Completed goods are shipped immediately to customers, and entries to complete and
sell products are combined at the trigger point which is upon sales. The entry at the
trigger point will include a debit to finished goods at

a. 12,000
b. 888,000
c. 900,000
d. 906,000

14. Ultimate JIT system is employed where there is only one entry prepared other than the
entry to record actual incurrence of conversion cost. The entry at the trigger point which
is upon product sales will include

a. Credit RIP, P300,000 and Credit Conversion Cost Control, P600,000

b. Credit Accounts Payable, P306,000 and Credit Conversion Cost control, P600,000
c. Debit RIP, P6,000 and Debit Finished Goods, P900,000
d. Debit Cost of Goods Sold, P888,000 and Credit Accounts Payable, P300,000

15. All costs are charged to Cost of Goods Sold with subsequent backflush of costs to the
RIP and FG inventory at the end of the period. The entry at the trigger point which is
upon sales will include

a. A debit to Finished Goods at P12,000

b. A debit to Cost of Goods Sold at P888,000
c. A debit to Finished Goods at P900,000
d. A debit to Cost of Goods Sold at P904,000

END