INTEGRATION: ADVANCED FINANCIAL ACCOUNTING AND REPORTING

JUST-IN-TIME & BACKFLUSH COSTING

PROBLEM 1
ABC Inc. is employing a sophisticated just-in-time manufacturing system. The company uses backflush costing for
recording its production. The following transactions occurred for the year ended Dec 31, 2022:

a. Purchased P170,000 of raw materials on account

b. All materials purchased were requisitioned for production
c. Incurred direct labor costs of P80,000
d. Actual factory overhead costs amounted to P122,000
e. Applied conversion costs totaled P202,000 including direct labor cost of P80,000
f. All telephones were completed and sold

What is the cost of goods sold for the year ended Dec 31, 2022?

PROBLEM 2
DEF Inc. is using Just-in-Time Production System and Backflush Cost Accounting System for the year ended Dec 31,
2022. The following information provided for the year 2022:

a. Raw materials purchased for the year 2022 totaled P1,000,000

b. Direct labor for the year 2022 totaled P500,00
c. Actual overhead for the year 2022 totaled P300,000 and the standard overhead rate is 50% of direct labor cost.
d. The production report for year 2022 showed that the Finished Goods Inventory at Dec 31 was P200,000
consisting of:
Direct Materials 110,000
Direct Labor 60,000
Factory Overhead 30,000

What is the Cost of Goods Sold for the year ended Dec 31, 2022?

PROBLEM 3
XYZ Company has a cycle of 3 days, a Raw and In Process (RIP) and charges all conversion cost to cost of goods sold.
At the end of each month, all inventories are counted, conversion costs components are estimated and inventory account
balances are adjusted. Raw material cost is backflushed from Raw and In Process (RIP) account to finished goods. The
following information is provided for the month of June:

Beg balance of RIP account, including P1,000 conversion cost 5,000

Beg balance of finished goods account including P6,000 conversion cost 10,000
Raw materials received on credit 400,000
Direct labor cost 300,000
Factory overhead applied 500,000
End RIP inventory account per physical count including P7,000 conversion cost 20,000
End finished goods inventory per physical count including P4,000 conversion cost 6,000

1. What is the amount of conversion cost included cost of goods sold in June?
2. What is the amount of direct materials backflushed from RIP to finished goods?
3. What is the amount of direct materials backflushed from finished goods to cost of goods sold?