A company using Just-in-Time (JIT) methods likely would show approximately the same net operating income under both absorption and variable costing because
A)ending stock would be valued in the same manner for both methods under JIT.
B)production is geared to sales under JIT and thus there would be little or no ending stock.
C)under JIT fixed manufacturing overhead costs are charged to the period incurred rather than to the product produced.
D)there is no distinction made under JIT between fixed and variable costs.

Question

Quizplus · Accepted Answer

Under Just-in-Time (JIT) methods, production is closely aligned with sales, minimizing the amount of ending inventory. Since the difference in net operating income between absorption and variable costing primarily arises from how ending inventory is treated, with little or no ending inventory under JIT, the net operating income would be similar under both costing methods.

A Company Using Just-In-Time (JIT) Methods Likely Would Show Approximately