Grand a unit of Outdoor LandscapeOutdoorLandscape, manufactures a line of electric, cordless, lawn mowers. Senior management of Outdoor LandscapeOutdoorLandscape has noticed that GrandGrand has been producing more lawn mowers than it has been selling, and that the unit's inventory has been steadily increasing.

Senior management of

Outdoor LandscapeOutdoorLandscape suspects that the bonus plan in place for the head of

GrandGrand is behind this practice. Senior management of Outdoor LandscapeOutdoorLandscape

is contemplating to switch from the current sequential tracking to a backflush costing system in order to stop the overproduction at GrandGrand. Specifically, senior management of Outdoor LandscapeOutdoorLandscape is considering a backflush costing system with the following two trigger points:

Purchase of direct materials

Sale of finished goods

Each mower takes 2 hours to assemble. There are no beginning inventories of materials or finished goods and no beginning or ending work-in-process inventories.

Direct materials purchased	$3,024,000		Conversion costs incurred	$724,200
Direct materials used	$2,840,800		Conversion costs allocated	$589,600

GrandGrand

records direct materials purchased and conversion costs incurred at actual costs. It has no direct materials variances. When finished goods are sold, the backflush costing system "pulls through" standard direct materials cost

($ 106$106

per unit) and standard conversion cost

($ 22$22

per unit).

GrandGrand

produced

26 comma 80026,800

finished units in

MarchMarch

20202020

and sold

26 comma 40026,400

units. The actual direct materials cost per unit in

MarchMarch

20202020

was

$ 106$106,

and the actual conversion cost per unit was

$ 19$19.

Any under- or overallocated conversion costs are written off monthly to Cost of Goods Sold