If a company employs JIT inventory techniques, which statement is true?
A)Variable and full costing income will differ very little since there is almost no inventory on hand.
B)Variable and full costing income will differ very little since there are almost no fixed costs incurred on production.
C)Variable and full costing income will differ greatly since actual costs are difficult to determine.
D)Variable and full costing income will differ greatly since there will be a large difference between gross margin and contribution margin.

Question

Quizplus · Accepted Answer

With JIT inventory, the company maintains minimal inventory levels, which means there are fewer costs to allocate to the products. Therefore, the difference between variable and full costing income will be negligible, and option A is the correct choice.

If a Company Employs JIT Inventory Techniques, Which Statement Is