Use t-accounts to show flow of costs using backflush costing

Reference no: EM13903052

Compare just-in-time to a traditional accounting system. Tarheel Publishing is a nonprofit company that uses just-in-time methods. Recently, the company received an order for 10,000 books. The company purchased and used $100,000 of materials for this order. The company incurred labor costs of $45,000 and overhead costs of $75,000. The company credits all costs to ‘‘Wages and Accounts Payable.''
The accounting period ended before the company completed producing and shipping the order. The firm had 5 percent of the total costs incurred still in Work-in-Process Inventory and 20 percent of the total costs incurred still in Finished Goods Inventory.

a. Use T-accounts to show the flow of costs using backflush costing.

b. Use T-accounts to show the flow of costs using a traditional costing system.

Reference no: EM13903052

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