Which of the following statements is true of the just-in-time costing system?
A)It increases the need for suppliers to deliver raw materials on time.
B)It records summary journal entries before the units are purchased.
C)It results in increased inventory storage costs.
D)It increases the risk of the inventory becoming obsolete or unsalable.

Question

Quizplus · Accepted Answer

The just-in-time costing system requires suppliers to deliver the necessary raw materials at the precise time they are needed to avoid unnecessary inventory storage costs. Therefore, it increases the need for suppliers to deliver on time. Option B is incorrect as the recording of journal entries happens after the purchase of units, and not before. Option C is incorrect as the just-in-time costing system aims to reduce inventory storage costs. Finally, option D is incorrect since just-in-time costing systems help to minimize the inventory levels, which reduces the risk of obsolete or unsalable inventory.

Which of the Following Statements Is True of the Just-In-Time