prepare the journal entries for the month using backflush costing 649481

BACKFLUSH COSTING VERSUS TRADITIONAL: VARIATION 1

Kaylin Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of May, Kaylin had the following transactions:

Raw materials purchased

$810,000

Direct labor cost

135,000

Overhead cost

675,000

Conversion cost applied

877,500

There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.)

Required:

1. Prepare the journal entries that would have been made using a traditional accounting approach for cost flows.

2. Prepare the journal entries for the month using backflush costing.