Asked by Bailey Hasler on May 29, 2024
Verified
Which of the following statements regarding backflush costing is false?
A) Backflush costing is simpler and less expensive than traditional product costing.
B) Backflush costing provides more-detailed information than a job order costing system.
C) When using backflush costing, a cost-benefit decision needs to be made.
D) It is only likely to be used in an environment where production-related inventories are kept low.
Backflush Costing
A simplified accounting method that applies costs to products after the completion of production, often used in just-in-time manufacturing systems.
Product Costing
The process of determining the total cost involved in creating a product, considering materials, labor, and overheads.
Job Order Costing
A cost accounting system that assigns manufacturing costs to an individual product or batches of products, typically used for custom orders or unique products.
- Understand the fundamentals and usage of Just-in-Time (JIT) and backflush costing methods.
Verified Answer
ZK
Zybrea KnightJun 05, 2024
Final Answer :
B
Explanation :
Backflush costing is a simplified costing method that relies on the number of components used to produce a product rather than tracking actual costs. While it is true that backflush costing can be simpler and less expensive than traditional product costing (A), it does not provide more detailed information than a job order costing system (B). In fact, it is less detailed because it does not track actual costs. When using backflush costing, a cost-benefit decision does need to be made (C), and it is typically used in environments where production-related inventories are kept low (D).
Learning Objectives
- Understand the fundamentals and usage of Just-in-Time (JIT) and backflush costing methods.