Backflush Costing

Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year:

Purchased raw materials on account for $600,000.

Placed all materials received into production.

Incurred actual direct labor costs of $90,000.

Incurred actual overhead costs of $625,000.

Applied conversion costs of $675,000.

Completed all work for the month.

Sold all completed work.

Computed the difference between actual and applied costs.

Required:

1. Assume the second trigger point in Requirement 1 is the sale of goods. If an amount box does not require an entry, leave it blank.

2. Assume there is only one trigger point and it is (a) completion of the goods or (b) sale of goods. If an amount box does not require an entry, leave it blank.

3. How would the backflush costing journal entries differ from Requirement 1 for (b)? If an amount box does not require an entry, leave it blank.