The total costs of a production run are recorded all at once, at the end of the process.
This allows the company to simplify its expense tracking processes, thus saving accounting and process costs, but it may also limit the detail of information that the company retains related to individual costs for production and sales.Īdvantages and Disadvantages of Backflush Costing “Flushing” costs to the end of the production run eliminates the detailed tracking of expenses, such as raw material and labor costs, throughout the manufacturing process, which is a feature of traditional costing systems. Backflush costing is also commonly referred to as backflush accounting. In short, it is an accounting method that records the costs associated with producing a good or service only after they are produced, completed, or sold. Advantages and Disadvantages of Backflush Costingīackflush costing is a product costing approach, used in just-in-time (JIT) operating environments, in which costing is delayed until goods are finished.īackflush costing is a product costing system generally used in a just-in-time (JIT) inventory system.
0 kommentar(er)
