Which of the following pertains to a just in time production system? A. Direct m

Question

Which of the following pertains to a just in time production system? A. Direct materials and work in process are combined into a conversion inventory account B. Direct materials and work in process are combined into a raw and in process inventory account C. Work in process and conversion costs are combined into a raw and in process inventory account D. Direct materials and conversion costs are combined into in process inventory account Which of the following pertains to a just in time production system? A. Direct materials and work in process are combined into a conversion inventory account B. Direct materials and work in process are combined into a raw and in process inventory account C. Work in process and conversion costs are combined into a raw and in process inventory account D. Direct materials and conversion costs are combined into in process inventory account

Explanation / Answer

B. Direct materials and work in process are combined into a raw and in process inventory account.

In case of JIT the aim is to reduce the cost associated with extra inventory holding. This means that only inventory necessary for keeping the production going before fresh material arrives. Thus all the material in hand is combined to keep the inventory cost under control which results in minimum inventory or elimination of extra inventory.

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