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please help More info Senior management of Outdoor Garden suspects that the bonus plan in place for the head of Techno is behind this practice.
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More info Senior management of Outdoor Garden suspects that the bonus plan in place for the head of Techno is behind this practice. Senior management of Outdoor Garden is contemplating to switch from the current sequential tracking to a backflush costing system in order to stop the overproduction at Techno. Specifically, senior management of Outdoor Garden 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. Data table Techno 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 (\$109 per unit) and standard conversion cost (\$22 per unit). Techno produced 27,500 finished units in March 2020 and sold 21,300 units. The actual direct materials cost per unit in March 2020 was $109, and the actual conversion cost per unit was $20. Any under-or overallocated conversion costs are written off monthly to Cost of Goods Sold. 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 Garden 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 Garden's senior management to stop the overproduction at Techno? Record the entry for the completion of finished goods Step by Step Solution
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