Hepworth Company has implemented a JIT system and is considering the use of backﬂush costing. Hepworth had the following transactions for the current ﬁscal year:
1. Purchased raw materials on account for $600,000.
2. Placed all materials received into production.
3. Incurred actual direct labor costs of $90,000.
4. Incurred actual overhead costs of $625,000.
5. Applied conversion costs of $675,000.
6. Completed all work for the month.
7. Sold all completed work.
8. Computed the difference between actual and applied costs.
1. Prepare the journal entries for traditional and backﬂush costing. For backﬂush costing, assume there are two trigger points: (1) the purchase of raw materials, and (2) the completion of the goods.
2. Assume the second trigger point in Requirement 1 is the sale of goods. What would change for the back ﬂush-costing journal entries?
3. What if there is only one triggerpointanditis(a)completionofthegoodsor(b)saleofthegoods? How would the back ﬂush-costing journal entries differ from Requirement1for (a) and (b)?