Question

Backflush costing, two trigger points, completion of production and sale (continuation of 20-23). Assume the same facts as in Exercise 20-23, except now Road Warrior uses only two trigger points, the completion of good finished units of product and the sale of finished goods. Any under- or overallocated conversion costs are written off monthly to Cost of Goods Sold.

1. Prepare summary journal entries for August including the disposition of under- or overallocated conversion costs.

2. Post the entries in requirement 1 to T-accounts for Finished Goods Control, Conversion Costs Control, Conversion Costs Allocated, and Cost of Goods Sold.

 

Answer 1

Backflush costing, two trigger points, completion of production and sale (continuation of 20-23).

1.

(a) Purchases of direct materials	No Entry
(b) Incur conversion costs	Conversion Costs Control	723,600
	Various Accounts		723,600
(c) Completion of finished goods	Finished Goods Control	3,484,000
	Accounts Payable Control		2,733,600
	Conversion Costs Allocated		750,400
(d) Sale of finished goods	Cost of Goods Sold	3,432,000
	Finished Goods Control		3,432,000
(e) Underallocated or	Conversion Costs Allocated	750,400
Overallocated conversion	Costs of Goods Sold		26,800
Costs	Conversion Costs Control		723,600

2.

Underallocated or	Conversion Costs Allocated	750,400
Overallocated conversion	Costs of Goods Sold		26,800
Costs	Conversion Costs Control		723,600