Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth...

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 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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ekkarill92 answered 3 months ago

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