Absorption costing is more in-line with JIT inventory concepts than variable costing.

Question

Quizplus · Accepted Answer

JIT (Just-In-Time) inventory concepts focus on minimizing inventory levels and reducing storage costs, which aligns more closely with variable costing because it only includes variable production costs in product costs, allowing for better cost control and decision-making related to inventory management. Absorption costing includes both fixed and variable manufacturing costs in the cost of inventory, which does not directly support the JIT goal of minimizing inventory levels.

Absorption Costing Is More In-Line with JIT Inventory Concepts Than