BACKFLUSH ACCOUNTING

[Examines the reasons why Backflush Accounting (BA) failed to replace Traditional Costing Systems]

By,

CHAPTER 1: INTRODUCTION1

1.1 Background of the study1

1.2 Problem Statement5

1.3 Research Aims and Objectives5

1.4 Significance of the Study5

1.5 Nature of the study6

1.6 Research Questions6

CHAPTER 2: LITERATURE REVIEW7

2.1 Theoretical framework7

2.2 Two key Principles9

2.3 Procedures in Backflush Costing10

2.4 When Is Backflush Costing Appropriate?11

2.5 Literature Review11

2.6 Critiques and Discussion12

2.7 Philosophy of Traditional Cost Accounting Methods15

2.8 Critical Examination of Backflush Accounting15

2.9 Variants of Backflush Accounting (BA)16

2.10 Suitability of Backflush Accounting (BA)17

2.11 Another perspective of Backflush Accounting (BA)17

CHAPTER 3: METHODOLOGY22

3.1 Research Design22

3.2 Research Technique22

3.3Research instruments23

3.4 Sampling Strategy23

3.5 Research Approach23

REFERENCES25

APPENDIX31

Chapter 1: Introduction

Background of the study

The traditional approach for the manufacturing, which started in the Victorian era, emphasizes long generation races to augment the utilization of assets. While this increments proficiency and lessens assembling expenses, it makes stock, since handling is not triggered by customer's requests. The strategy produces goods regardless if anybody needs them or not. Be that as it may stock brings back cash, since it must be saved and guaranteed. Stock likewise has an offer by date. Also great stock possessions might likewise hide different issues - exploited arranging and wasteful handling methodologies - for instance. This methodology was tested by systems improved in the fifties and sixties by Japanese associations and later embraced by western firms - especially add up to quality administration and without a moment to spare (JIT).

The present day methodology might be typified in two statements: client centering. In spite of the fact that this sounds such as practical judgment skills, it has critical operational suggestions and requires a complete society change in numerous cases, which might be tricky to accomplish. JIT is dependent upon the guideline of giving clients what they need when they need it. Goods are handled just when they have been requested. This methodology additionally distinguishes that quality is included just throughout assembling, so it is committed to the disposal of non-quality including exercises for example archiving crude materials. Thus, stock is acknowledged to be an unpleasant thing. Granted that stock may be held for great business explanations, the JIT reasoning states that it must not be expected to remember meet the lacks of the arranging frameworks. However, it is vital to recall that is unrealistic for generally collection to hold no stock constantly. Do these new methodologies to assembling have important suggestions for customary bookkeeping frameworks? In light of standard taking a toll, such frameworks are successive following techniques. The point when crude material is conveyed to the production line, a "products accepted" note is raised to charge crude materials and credit buy gatherings - the supplier's receipt is matched against the collection at a later date. Crude materials are then discharged to the processing plant and a bookkeeping passage is made to record this development to function in advancement. The industrial facility in the long run processes finalized products and by and by a bookkeeping section records this exchange. At a later date, the last bookkeeping passage is made after the finalized ...