A Just-In-Time Inventory System Usually Reduces Costs For

question 202

Multiple Choice

A just-in-time inventory system usually reduces costs for:

• A) both the producer and its suppliers.
• B) suppliers, but not the producer.
• C) the producer, but not its suppliers.
• D) neither the supplier nor the producer, though it does lead to more flexibility for both.

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Definitions:

Fixed Factory Overhead Volume Variance

A measure used in cost accounting to determine the difference between the budgeted and actual volume of production, affecting the allocation of fixed overhead costs.

Standard Direct Materials

The predetermined cost and quantity of raw materials expected to be used in the production process, used for budgeting and performance evaluation.

Fixed Factory Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, due to variations in production levels.

Variable Factory Overhead Controllable Variance

The difference between the actual variable overhead costs incurred and the expected costs based on the standards set for the production volume.