30 September 2013
Backflush costing discards the traditional costing system. traditionally what we do is purchasing Raw material (recording them) ,converting them in WIP( and recording) and completing them into finished products and then selling them. But under blackflush accounting that is generally used in JIT envcironment there is no separate record of R.M and WIP and only Raw material in process account is prepared. Further labour costs are combined with overheads and are dealt in conversion cost control account. Journal entries are passed at certain pre decided trigger points of operating cycle
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