Question

A firm uses backflush costing on a throughput accounting basis. It incurs the following costs this period (the firm has NO fixed overhead costs).

• Direct materials costs: $20,000
• Direct labor costs: $20,000
• Variable overhead costs: $10,000

The firm's total units (completed and in process) is 1,988. The firm has 92 units in process and 34 unsold units in finished goods. The firm has $598 of unused raw materials left over at the end of the period.

What is the balance of the Cost of Goods Sold account AFTER the firm backflushes costs to inventory accounts (round final answer to nearest cent if necessary)?

Answer 1

Total Expenses
Raw Material	20000
Labor	20000
Direct Expenses	10000
Less: Raw material(unused)	598
	49402
Total Units	1988
Per Unit expense	24.85
Cost of Finished goods held as inventory = 24.85 * 34 = 844.90
Number of Finished goods Produced = 1988-92 = 1896
Cost of Finished Goods produced= 1896*24.85 = 47115.6
Cost of Goods sold = Cost of Finished Goods produced - Cost of Finished goods held as inventory
Cost of Goods sold = 47115.6 - 844.90 = $ 46270.70