Chen Manufacturing uses backflush costing. Chen has the following information for the most recent month of activity:

Purchase of direct materials $725,000

Direct materials used $705,000

Conversion cost incurred $1,450,000

Direct materials standard cost $20 per unit

Conversion cost at standard $40 per unit

Units produced 35,000 units

Units sold 33,000 units

Required:

1. Prepare the journal entries for purchase of materials, conversion costs, the completion of product during the month, the sale of product, and the closing entries for conversion costs and material costs.

2. What is the final amount for cost of goods sold?

3. Under what conditions is backflush costing used in practice?