Requirement 2. Refer to your answer in requirement 1. How is operating income going to differ under backflush costing compared to the current sequential tracking?
Under backflush costing, operating income will be
lower by ____compared to sequential tracking.
i) (Click the icon to view additional information.) The following data are for Techno for March 2020: (Click the icon to view the March data.) Read the requirements.
Data table
X
Direct materials purchased$ 2,845,000 Direct materials used $ 2,787,200
$ 722,900 Conversion costs allocated $ 562,800
JE 4
Cost ot Goods Soid Inventory Control Conversion Costs Allocated
2,962,500
2,464,800 497,700
Techno records direct materials purchased and conversion costs incurred at actual costs.
system *pulls through*standard direct materials cost ($104 per unit and standard conversion cost ($21 per unit). Techno produced 26,800 finished units in March 2020 and sold 23,700 units, The actual direct materials cost per unit in March 2020 was $104,
Finally prepare the entry to record underallocated or over-allocated conversion costs. Journal Entry Date Accounts Debit JE 5 Conversion Costs Allocated 497,700 Cost of Goods Sold 225,200 Conversion Costs Control
costs are written off monthly to Cost of Goods Sold.
Credit
Print
Done
722,900
Now post the backflush costing method journal entries to the applicable T-accounts provided. (If no journal entry was required, do not post an entry to the T-account. For ac Review the backflush costing journal entries.you prepared in Requirement 1.
Backflush costing journal entries
X
Inventory Control 2,845,000 JE 4
Cost of Goods Sold JE4 2,962,500 JE 5 225,200 Bal. 3,187,700 Bal.
JE1
2,464,800
Journal Entry Accounts Inventory Control
Date JE 1
Debit 2,845,000
Credit
Bal.
380,200
Bal.
Accounts Payable Control Conversion Costs Control Various Accounts (such as Wages Payable Control) No Entry Required Cost of Goods Sold Inventory Control Conversion Costs Allocated Conversion Costs Allocated
2,845,000 722,900
Conversion Costs Allocated JE5 497,700 JE 4 497,700
Conversion Costs Control JE2 722,900 JE 5 722,900
JE 2
722,900
JE 3 JE 4
Bal.
Bal.
Bal.
Bal.
2,962,500 2,464,800 497,700 497,700 225,200 722,900
lower by
Under backflush costing, operating income will be
compared to sequential tracking
JE 5
Cost of Goods Sold Conversion Costs Control
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