Difference between Backflush Costing and Conventional Costing

Posted On // 1 comment

Two major differences between the two systems are:

Under conventional costing raw materials go to raw materials inventory, they are transferred to WIP. Under JIT/Backflush costing raw materials just go to RIP. In JIT raw materials are only ordered when required.
Under conventional costing, direct labor and overhead are charged direct to WIP. They are then moved to finished goods and cost of goods sold (sequential processing). 

 Under JIT/backflush costing, these costs are moved directly to finished goods inventory or cost of goods sold. Basic reason is that – WIP is minimum, so costs move rapidly under Backflush costing system.

Related post

1 comment :

  1. Do your accounting homework, accounting assignments with our accounting helps you to do your accounting homework and accounting assignments email me homework solution and accounting tutoring help. Our homework assistance on prashant8778@yahoo.co.in

    Accounting tutoring help

    Accounting homework solution

    Accounting homework

    Accounting assignments


Total Pageviews