2 (a) Explain the term ‘backflush accounting’ and the circumstances in which its use would

2 (a) Explain the term ‘backflush accounting’ and the circumstances in which its use would be appropriate.

(6 marks)

(a) Backflush accounting focuses upon output of an organisation and then works backwards when allocating costs between costof goods sold and inventories. It can be argued that backflush accounting simplifies costing since it ignores both labourvariances a