Backflush Costing Is a Costing Method That

question 2

Multiple Choice

Backflush costing is a costing method that:

• A)Charges current production costs directly to finished goods inventory.
• B)Charges past production costs directly to finished goods inventory.
• C)Charges current production costs using actual costs incurred.
• D)Charges current production cost directly to work-in-process inventory.

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Definitions:

Actual Materials

The actual amount of materials used in the production process, measured in physical units or cost.

Standard Price

A predetermined cost for a unit of material, labor, or overhead anticipated in the budgeting process, against which actual costs are compared.

Actual Output

The real quantity of goods or services produced by a company, as opposed to planned or expected output.

Standard Variable Overhead Rate

The rate used in budgeting and costing that applies variable overheads to a specific activity basis such as labor hours.