One of the Major Advantages of a JIT System Is

question 80

Multiple Choice

One of the major advantages of a JIT system is that it

• A)helps identify sources of defects in outputs.
• B)ensures production lines have required inputs.
• C)lets organizations spot defective inputs quickly.
• D)eliminates inventory holding costs.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or volume of production in a business, such as materials and labor.

Activity Variance

The difference between a revenue or cost item in the flexible budget and the same item in the static planning budget. An activity variance is due solely to the difference between the actual level of activity used in the flexible budget and the level of activity assumed in the planning budget.

Flexible Budget

A report showing estimates of what revenues and costs should have been, given the actual level of activity for the period.

Static Planning Budget

is a budget based on a fixed level of activity and does not change with actual activity levels, useful for planning but less so for performance evaluation.