![]() When inventories are minimal, as in JIT production systems, backflush costing simplifies costing systems without losing much information.Organizing manufacturing in cells, reducing defects and manufacturing cycle time, and ensuring timely delivery of materials enables purchasing, production, and sales to occur in quick succession with minimal inventories. When journal entries for one or more stages are omitted, the journal entries for a subsequent stage use normal or standard costs to work backward to “flush out” the costs in the cycle for which journal entries were notmade. Backflush costing is a costing system that omits recording some of the journal entries relating to the stages from purchase of direct materials to the sale of finished goods. An alternative approach to sequential tracking is backflush costing.
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