Which of the following statements is true of the justminusinminustime costing system? A. It results in increased inventory storage costs. B. It records summary journal entries before the units are purchased. C. It increases the risk of the inventory becoming obsolete or unsalable. D. It increases the need for suppliers to deliver raw materials on time.

Question

Business

Toby

19 October, 08:27

Which of the following statements is true of the justminusinminustime costing system? A. It results in increased inventory storage costs. B. It records summary journal entries before the units are purchased. C. It increases the risk of the inventory becoming obsolete or unsalable. D. It increases the need for suppliers to deliver raw materials on time.

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London Vincent · Answer 1

Answer: D. It increases the need for suppliers to deliver raw materials on time.

Explanation:

The just-in-time costing system is employed in the just-in-time management strategy that aims to minimize inventory, increase efficiency while decreasing waste by receiving goods only as needed for production. The just-in-time production process depends on steady production, high-quality workmanship, no event of machine breakdowns, reliable suppliers etc. As it aligns raw-material orders from suppliers directly with production schedules, it therefore increases the need for suppliers to deliver raw materials on time for production of orders.