FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Backflush Costing Blue Water Sails, Inc. (BWS) manufactures sailcloth used by sailmakers that produce sails for sailboats. BWS’s sailcloth is the conventional polyester-based sail material and is used
widely in recreational boating. Sailmakers throughout the world use BWS’s sailcloth. The manufacture
of sailcloth has a small number of processes, and BWS integrates them carefully so that there is very
little Work-in-Process Inventory. The product is measured in yards of cloth, which is prepared in rolls 42
inches wide. Because it has little Work-in-Process Inventory, BWS also uses backflush accounting to simplify the accounting for its operations. BWS has the following information for the most recent accounting
period. The beginning inventory of polyester fiber was $142,000, and the ending inventory was $185,000.
[LO 6-8]
Required
1. Show the entries for
and the closing entries.
2. Under what conditions is backflush costing used in practice?
Polyester fiber purchased $710,000
Conversion cost incurred $1,450,000
Direct materials standard cost $4.25 per yard of cloth
Conversion standard cost $8.50 per yard of cloth
Units produced 155,000 yards of cloth
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