Raymore, a unit of Outdoor UnPlugged, manufactures a line of electric, cordless, lawn mowers. Senior management of Outdoor UnPlugged has noticed that Raymore has been producing more lawn mowers than it has been selling. and that the unit's inventory has been steadily increasing (Click the icon to view additional information) The following data are for Raymore for March 2020 : (Click the icon to view the March data) Read the requirements. 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 backilush costing that senior mariagement of Outdoor UnPlugged is considering (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by recording the entries Outdoor UnPlugged would use for the current sequential tracking starting with the purchase of direct materials. Requirements 1. Prepare summary joumal 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 UnPlugged 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 UnPlugged's senior management to stop the overproduction at Raymore? Direct materials purchased $1,550,000 Conversion costs incurred $901,000 Direct materials used $1,530,000 Conversion costs allocated $884,000 Raymore 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 ( $90 per unit) and standard conversion cost ( $52 per unit). Raymore produced 17,000 finished units in March 2020 and sold 16,800 units. The actual direct materials cost per unit in March 2020 was $90, and the actual conversion cost per unit was $53. Any under-or overallocated conversion costs are written off monthly to Cost of Goods Sold. Senior management of Outdoor UnPlugged suspects that the bonus plan in place for the head of Raymore is behind this practice. Senior management of Outdoor UnPlugged is contemplating to switch from the current sequential tracking to a backflush costing system in order to stop the overproduction at Raymore. Specifically, senior management of Outdoor UnPlugged 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
