A Just-In-Time (JIT) System Minimizes Inventory Cost for the Company

question 45

True/False

A just-in-time (JIT) system minimizes inventory cost for the company but increases inconvenience in the form of noise, traffic, and air pollution for the community at large.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, based on budgeted or planned amounts.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating manufacturing overhead in cost accounting.

Variable Manufacturing Overhead

This refers to the expenses in manufacturing that vary in direct proportion to the volume of production, such as utilities and materials.

Standard Hours

The expected amount of time required to complete a task or produce a unit of product under normal conditions.