Question 1

Which of the following is a disadvantage of a just-in-time management system?
A)It results in a decrease in production space.
B)It increases the inventory cost.
C)The risk of the inventory becoming obsolete is very high.
D)The users of this system sometimes lose sales because of little or no inventory buffers.

Accepted Answer

The just-in-time management system is designed to keep inventory levels low and only order what is needed to fulfill customer orders. This means that there is little or no inventory buffer available, which can result in lost sales if demand suddenly increases and the company is unable to meet it. This is a disadvantage of the system. Option A is incorrect because the just-in-time management system often involves reducing the amount of production space needed. Option B is incorrect because the just-in-time management system is designed to reduce inventory costs. Option C is incorrect because the risk of inventory becoming obsolete is reduced with the just-in-time management system.

Question 2

Companies using just-in-time management systems are far more vulnerable to production shutdowns if they receive poor-quality or defective raw materials.

Accepted Answer

Just-in-time systems rely on receiving materials only as they are needed for production, so any disruptions in the supply chain can have a significant impact on production. If poor-quality or defective raw materials are received, there may not be enough time to replace them before they are needed in the production process, which can lead to shutdowns or delays.

Question 3

Just-in-time costing does not track the cost of products from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.

Accepted Answer

Just-in-time costing focuses on reducing waste and improving efficiency by bringing materials and products to the production line only when they are needed, without excess inventory. This method does not require tracking the cost of products through traditional inventory accounts. Instead, costs are attributed to specific production activities or work cells, allowing for more accurate and flexible cost management.

Question 4

Which of the following temporary accounts is typically used in just-in-time costing systems to accumulate direct labor and manufacturing overhead costs?
A)Adjustments account
B)Conversion Costs account
C)Manufacturing Overhead account
D)Work-in-Process Inventory account

Accepted Answer

Just-in-time costing systems typically use a Conversion Costs account to accumulate direct labor and manufacturing overhead costs. This is because these systems emphasize the importance of efficient production processes, and want to minimize the amount of inventory and work-in-process on hand. By focusing on conversion costs (which are the costs incurred to convert direct materials into finished goods), managers can better identify areas where the manufacturing process may not be as efficient as it could be. The other options listed are not typically used in just-in-time costing systems.

Question 5

Just-in-time costing systems use three inventory accounts: Raw Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

Accepted Answer

Just-in-time costing systems typically minimize or eliminate inventory accounts, focusing on reducing inventory levels and costs by producing goods only as needed.

Question 6

The just-in-time costing system waits until the units are completed to record the cost of production.

Accepted Answer

The just-in-time costing system records costs when the production is completed, aligning with its focus on reducing inventory and waste.

Question 7

Under the just-in-time costing system,a credit purchase of raw materials is recorded by ________.
A)debiting the Raw Materials Inventory account
B)crediting the Conversion Costs account
C)debiting the Raw and In-Process Inventory account
D)crediting the Cash account

Accepted Answer

In a just-in-time costing system, raw materials are directly debited to the Raw and In-Process Inventory account when purchased, reflecting their immediate use in production.

Question 8

List and briefly discuss three major differences between just-in-time costing (JIT)and traditional costing.

Accepted Answer

The answer of List and briefly discuss three major differences...

Question 9

Provide answers to the following just-in-time costing questions.
 $$\begin{array} { | l | l | } 
\hline  { \text { Just-in-Time Costing Question } } & \text { Just-in-Time Costing Answer } \
\hline \text { When are the costs of products recorded? } & \
\hline \text { Which inventory accounts are used? } & \
\hline \text { Which accounts are used to record } & \
\text { manufacturing costs? } & \
\hline
\end{array}$$

Accepted Answer

The answer of Provide answers to the following just-in-time costing...

Question 10

How do just-in-time production systems differ from traditional production systems in their approach to raw materials and labor?

Accepted Answer

The answer of How do just-in-time production systems differ from...

Question 11

Just-in-time costing systems use a combined account for Raw Materials Inventory and Work-in-Process Inventory known as the ________.
A)Raw Materials Inventory account
B)Work-in-Process Inventory account
C)Raw and In-Process Inventory account
D)Process account

Accepted Answer

Just-in-time costing systems use a combined account for Raw Materials Inventory and Work-in-Process Inventory, which is commonly known as the "Raw and In-Process Inventory" account. This is because JIT systems focus on minimizing inventory levels and reducing waste, and combining these two inventory accounts allows for better tracking of materials usage throughout the production process. Option A and B are not the correct choices as they refer to separate accounts for Raw Materials Inventory and Work-in-Process Inventory respectively. Option D is not an appropriate answer as the process account is used to record the costs of a particular production process, rather than for tracking raw materials and work-in-progress inventory.

Question 12

A just-in-time costing system does not use the Finished Goods Inventory account; instead,it combines the Finished Goods Inventory account with the Work-in-Process Inventory account.

Accepted Answer

The answer of A just-in-time costing system does not use...

Question 13

Just-in-time costing is also known as ________.
A)job costing
B)batch costing
C)backflush costing
D)process costing

Accepted Answer

Just-in-time costing is also known as backflush costing. This method involves waiting until the end of the production cycle to determine costs, which are then "flushed back" to the various stages of production. This allows for better tracking of costs and avoids the need for constant recalculations throughout the production process.

Question 14

Under the just-in-time costing system,underallocated and overallocated conversion costs are treated just like underallocated and overallocated manufacturing overhead.

Accepted Answer

Under the just-in-time costing system, all manufacturing costs, including conversion costs, are treated as overhead costs. Therefore, underallocated and overallocated conversion costs are treated in the same way as underallocated and overallocated manufacturing overhead. Both are adjusted at the end of the period using a predetermined allocation rate.

Question 15

________ is a costing system that starts with output that has been completed and then assigns manufacturing costs to units sold and to inventories.
A)Job costing
B)Batch costing
C)Backflush costing
D)Process costing

Accepted Answer

Backflush costing is a system that assigns costs to products only after they are completed, simplifying the accounting process by eliminating the need to track costs through each stage of production.

Question 16

What is the purpose of implementing a just-in-time inventory system?

Accepted Answer

The answer of What is the purpose of implementing a...

Question 17

Which of the following is an attribute of traditional costing systems?
A)Raw materials are ordered in large quantities.
B)Production is completed in self-contained work cells.
C)Suppliers make frequent deliveries of small quantities of raw materials.
D)Management works with suppliers to ensure defect-free raw materials.

Accepted Answer

Traditional costing systems rely on ordering raw materials in large quantities to benefit from economies of scale and reduce ordering costs.

Answer: D 
 Traditional costing systems often place greater emphasis on ensuring defect-free raw materials to reduce the cost of scrap and rework. However, this is not necessarily a unique attribute of traditional costing systems as it is also important in more modern costing systems.

Therefore, the best choice is A.

Question 18

Just-in-time costing systems do not use a separate Work-in-Process Inventory account.

Accepted Answer

Just-in-time costing systems do not use a separate Work-in-Process Inventory account as they aim to minimize inventory levels and focus on producing goods only when they are needed. As a result, the cost of direct materials, direct labor, and overhead is directly transferred to Finished Goods Inventory or Cost of Goods Sold, rather than being placed in a Work-in-Process Inventory account.

Question 19

The ________ system pulls materials,labor,and overhead costs into production under a just-in-time management system.
A)purchase-push
B)demand-push
C)purchase-pull
D)demand-pull

Accepted Answer

The demand-pull system is associated with just-in-time management, where production is driven by actual demand rather than forecasts, pulling materials and resources as needed.

Question 20

Under just-in-time costing,the purchase of raw materials is recorded by debiting the Raw Materials Inventory account.

Accepted Answer

The answer of Under just-in-time costing,the purchase of raw materials...

Quiz 19: Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Which of the following is a disadvantage of a just-in-time management system?

Companies using just-in-time management systems are far more vulnerable to production shutdowns if they receive poor-quality or defective raw materials.

Just-in-time costing does not track the cost of products from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.

Which of the following temporary accounts is typically used in just-in-time costing systems to accumulate direct labor and manufacturing overhead costs?

Just-in-time costing systems use three inventory accounts: Raw Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

The just-in-time costing system waits until the units are completed to record the cost of production.

Under the just-in-time costing system,a credit purchase of raw materials is recorded by ________.

List and briefly discuss three major differences between just-in-time costing (JIT)and traditional costing.

How do just-in-time production systems differ from traditional production systems in their approach to raw materials and labor?

Just-in-time costing systems use a combined account for Raw Materials Inventory and Work-in-Process Inventory known as the ________.

A just-in-time costing system does not use the Finished Goods Inventory account; instead,it combines the Finished Goods Inventory account with the Work-in-Process Inventory account.

Just-in-time costing is also known as ________.

Under the just-in-time costing system,underallocated and overallocated conversion costs are treated just like underallocated and overallocated manufacturing overhead.

________ is a costing system that starts with output that has been completed and then assigns manufacturing costs to units sold and to inventories.

What is the purpose of implementing a just-in-time inventory system?

Which of the following is an attribute of traditional costing systems?

Just-in-time costing systems do not use a separate Work-in-Process Inventory account.

The ________ system pulls materials,labor,and overhead costs into production under a just-in-time management system.

Under just-in-time costing,the purchase of raw materials is recorded by debiting the Raw Materials Inventory account.