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Lava Pocket, LLC uses backflush costing to assign product costs to inventory and values inventory using direct costing . All actual amounts are equal to

Lava Pocket, LLC 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 fixed overhead.

Total DM: $500,000 Total DL: $150,000 Variable overhead: $100,000 Total units completed and in process: 2,000 units

Lava Pocket, LLC has 350 units in finished goods inventory and 250 units in process. The firm does a count of raw materials inventory and finds $31,250 of raw materials inventory on hand at the end of the period. Which of the following is the cost backflushed to the RIP account (this firm uses a RIP account, a Conversion Costs account, and a Finished Goods account)?

$93,750

$125,000

$62,500

Cannot be determined from this information.

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