A firm uses backflush costing to assign product costs to inventory and values inventory using direct costing. All actual amounts are equal to budgeted amounts. The firm has no variable overhead.

Total DM	$4,000
Total DL	$1,000
Total Fixed OH	$1,000
Total complete & in process	20,000 units
Ending raw materials	$0

The firm has 35 units in finished goods inventory and 25 units in work in process.

Which journal entry appropriately backflushes costs to inventory accounts?

Group of answer choices

Debit: COGS $12

Credit: RIP $3.75

Credit: Conversion Costs $1.25

Credit: Finished Goods $7

Debit: RIP $3.75

Debit: Conversion Costs $1.25

Debit: Finished Goods $7

Credit: COGS $12

Debit: RIP $5

Debit: Conversion Costs $1.25

Debit: Finished Goods $8.75

Credit: COGS $15

Debit: COGS $15

Credit: RIP $5

Credit: Conversion Costs $1.25

Credit: Finished Goods $8.75