Which One of the Following Statements Is TRUE Regarding JIT

question 7

Multiple Choice

Which one of the following statements is TRUE regarding JIT inventory?

• A) It exists just in case something goes wrong.
• B) It is the minimum inventory necessary to keep a perfect system running.
• C) It hides variability.
• D) It is minimized with large lot production.
• E) It increases if setup costs decrease.

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Definitions:

Process Costing

An accounting methodology used in manufacturing to allocate costs of production to individual units, suitable for homogenous products.

Conversion Cost

The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished products.

Work In Process

Inventory that includes goods that are in the production process but not yet completed.

Direct Materials

The raw materials that are directly traceable to the production of specific goods or services.