Techno, a unit of Outdoor Corporation, manufactures a line of electric, cordless, lawn mowers. Senior management of Outdoor Corporation has noticed that Techno 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 Techno 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 backflush costing that senior management of Outdoor Corporation is considering. (Record debits first, then credits. Exclude explanations from any joumal entries.) Begin by recording the entries Outdoor Corporation would use for the current sequential tracking, starting with the purchase of direct materials. Journal Entry Accounts Date Debit Credit JE 1 Choose from any list or enter any number in the input fields and then click Check Answer. 14 parts remaining Clear All Check Answer i More Info Senior management of Outdoor Corporation suspects that the bonus plan in place for the head of Techno is behind this practice. Senior management of Outdoor Corporation 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 Corporation 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 i Data Table Conversion costs incurred $ 726,300 Direct materials purchased $ 3,010,000 Direct materials used $ 2,894,400 Conversion costs allocated $ 562,800 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 ($108 per unit) and standard conversion cost ($21 per unit). Techno produced 26,800 finished units in March 2020 and sold 26,400 units. The actual direct materials cost per unit in March 2020 was $108, and the actual conversion cost per unit was $18. 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 Corporation 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 Corporation's senior management to stop the overproduction at Techno? Print Done Techno, a unit of Outdoor Corporation, manufactures a line of electric, cordless, lawn mowers. Senior management of Outdoor Corporation has noticed that Techno 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 Techno 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 backflush costing that senior management of Outdoor Corporation is considering. (Record debits first, then credits. Exclude explanations from any joumal entries.) Begin by recording the entries Outdoor Corporation would use for the current sequential tracking, starting with the purchase of direct materials. Journal Entry Accounts Date Debit Credit JE 1 Choose from any list or enter any number in the input fields and then click Check Answer. 14 parts remaining Clear All Check Answer i More Info Senior management of Outdoor Corporation suspects that the bonus plan in place for the head of Techno is behind this practice. Senior management of Outdoor Corporation 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 Corporation 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 i Data Table Conversion costs incurred $ 726,300 Direct materials purchased $ 3,010,000 Direct materials used $ 2,894,400 Conversion costs allocated $ 562,800 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 ($108 per unit) and standard conversion cost ($21 per unit). Techno produced 26,800 finished units in March 2020 and sold 26,400 units. The actual direct materials cost per unit in March 2020 was $108, and the actual conversion cost per unit was $18. 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 Corporation 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 Corporation's senior management to stop the overproduction at Techno? Print Done
