Which of the following statements accurately describes manufacturing cost flows in a just-in-time (JIT) environment?
A) Direct labor and overhead are maintained in a work in process account for long periods of time.
B) There is little need to maintain a cost of goods sold account.
C) There is little need to maintain raw materials, work in process, or finished goods accounts.
D) Manufacturing costs are maintained in the finished goods account for long periods of time.

Question

Quizplus · Accepted Answer

In a JIT environment, the focus is on reducing inventory levels and having materials arrive just in time for production. This means that raw materials, work in process, and finished goods accounts are small or non-existent, as materials are immediately used and completed products are quickly shipped out. The emphasis is on minimizing costs and maximizing efficiency, which does not lend itself to maintaining large amounts of inventory or cost accounts.

Which of the Following Statements Accurately Describes Manufacturing Cost Flows