More info Senior management of Outdoor Family suspects that the bonus plan in place for the head of Innovative is behind this practice. Senior management of Outdoor Family is contemplating to switch from the current sequential tracking to a backflush costing system in order to stop the overproduction at Innovative. Specifically, senior management of Outdoor Family 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. Print Done - Data table - Direct materials purchased $ 2,768,000 Direct materials used $ 2,525,000 Conversion costs incurred $ 726,300 Conversion costs allocated $ 700,000 Innovative 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 ($101 per unit) and standard conversion cost ($28 per unit). Innovative produced 25,000 finished units in March 2020 and sold 24,500 units. The actual direct materials cost per unit in March 2020 was $101, and the actual conversion cost per unit was $27. Any under- or overallocated conversion costs are written off monthly to Cost of Goods Sold. Print Done Requirements 1. Prepare summary journal entries for March 2020 and post the entries to applicable T-accounts for both methods the current sequential tracking and the backflush costing that senior management of Outdoor Family is considering. 2. Refer to your answer in requirement 1. How is operating income going to differ under backflush costing compared to the current sequential tracking? 3. Do you think that switching to the backflush costing system is going to accomplish the goal of Outdoor Family's senior management to stop the overproduction at Innovative? Print Done Requirement 1. Prepare summary journal entries for March 2020 and post the entries to applicable T-accounts for both methods the current sequential tracking and the backflush costing that senior management of Outdoor Family is considering. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by recording the entries Outdoor Family would use for the current sequential tracking, starting with the purchase of direct materials. Date JE 1 Journal Entry Accounts Debit Credit Now prepare the entry to record the conversion costs incurred. Date JE 2 Journal Entry Accounts Debit Credit Prepare the entry to record work-in-process. Date JE 3 Journal Entry Accounts Debit Credit Record the entry for the completion of finished goods. Date JE 4 Journal Entry Accounts Debit Credit Prepare the entry to record the cost of finished goods sold. Date JE 5 Journal Entry Accounts Debit Credit Finally prepare the entry to record underallocated or over-allocated conversion costs. Date JE 6 Journal Entry Accounts Debit Credit Now post the sequential tracking method journal entries to the applicable T-accounts provided. (For accounts with a $0 balance, leave the balance line blank.) Review the sequential tracking journal entries you prepared in Requirement 1. Bal. Materials Inventory Control Work-in-Process Control Bal. Bal. Bal. Bal. Finished Goods Control Bal. Conversion Costs Allocated Bal. Cost of Goods Sold Bal. Conversion Costs Control Bal. Bal. Bal. Bal. Now record the entries Outdoor Family would use for backflush costing, starting with the purchase of direct materials. (Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required, select "No Entry Required" on the first line of the Accounts column and leave the remaining cells blank.) Date JE 1 Journal Entry Accounts Record the entry for conversion costs incurred. Date JE 2 Debit Credit Journal Entry Accounts Debit Credit Record the entry for the completion of finished goods. Date JE 3 Journal Entry Accounts Debit Credit Prepare the entry to record the cost of finished goods sold. Date JE 4 Journal Entry Accounts Debit Credit Finally prepare the entry to record underallocated or over-allocated conversion costs. Date JE 5 Journal Entry Accounts Debit Credit Now post the backflush costing method journal entries to the applicable T-accounts provided. (If no journal entry was required, do not post an entry to the T-account. For accounts with a $0 balance, leave the balance line blank.) Review the backflush costing journal entries you prepared in Requirement 1. Bal. Inventory Control Cost of Goods Sold Bal. Bal. Bal. Bal. Conversion Costs Allocated Bal. Bal. Conversion Costs Control Bal. Requirement 2. Refer to your answer in requirement 1. How is operating income going to differ under backflush costing compared to the current sequential tracking? Under backflush costing, operating income will be compared to sequential tracking. Requirement 3. Do you think that switching to the backflush costing system is going to accomplish the goal of Outdoor Family's senior management to stop the overproduction at Innovative? when the proposed backflush costing system is used, costs incurred in the current period be allocated to inventory