Material Variances are calculated regularly through physical counts and the resulting inventory adjustments.Backflush accounting is ideally suited to a just-in-time philosophy and is employed where the overall cycle time is relatively short and inventory levels are low. It is important that standard costs are close to actual costs to keep inventory costing reasonable accurate. While in a true just-in-time environment there would be no work-in-progress at all, there will, in practice, be a small amount of work-in-progress at any point in time. Cost of the Finished Goods is based on Standard Cost of materials, labor and overheadīackflushing simplifies costing and inventory transactions since it ignores both labor variances and work-in-progress.Finished goods inventory is increased by the carton quantity and standard cost.Materials on the bill of material are deducted from Raw Material Inventory.Open Quantity on the Work Order is reduced.When a product is packaged into a box or carton the operator wands the bar code. To trigger the transactions a Work Order or Kanban card with a bar code or RFID tag are used. Backflush is a single step inventory process that typically occurs and the end of a production line. The implementation of a just-in-time philosophy necessitates changes. Sequential tracking is common where management desires to track direct material and labor time to individual operations and products. Such systems are called ‘sequential tracking systems’ because the accounting system entries occur in the same order as purchases and production. Traditional standard costing systems track costs as products pass from raw materials, to work in progress, to finished goods, and finally to sales.

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