The closer a company moves towards just-in-time processing,the differences in unit costs between average costing and FIFO will be reduced.

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Quizplus · Accepted Answer

Just-in-time processing involves keeping minimal inventory and producing goods only when needed. This approach reduces the difference in unit costs between average costing and FIFO because there is less inventory to account for and assign costs to. In a just-in-time system, the costs of production are assigned to the units produced at the time of production, which is similar to the FIFO method. As a result, the difference in unit costs between average costing and FIFO is reduced.

The Closer a Company Moves Towards Just-In-Time Processing,the Differences in Unit