Some Companies Have Moved to JIT Without Changing the Substance

question 35

Multiple Choice

Some companies have moved to JIT without changing the substance of their accounting systems.Relying on the former accounting system may present problems for management because

• A) traditional accounting systems are designed to track items (labor efficiency, purchase price, overhead absorption) that are no longer primary concerns of management.
• B) control of cost drivers will be lost.
• C) managers do not understand the new manufacturing environment.
• D) traditional accounting systems discourage the creation of large inventories that are necessary to ensure uninterrupted production runs.

---

Definitions:

Manufacturing-Based Definition

relates to quality concepts focusing on adherence to specifications and efficiency in production processes.

Customer Dissatisfaction

Refers to the state when customers' expectations are not met by the products or services provided, leading to a possible decline in loyalty and business.

Warranty

A guarantee provided by a manufacturer or vendor regarding the condition of its product and a promise to repair or replace it within a specified time frame if it's found to be defective.

Maintenance Costs

The expenses involved in keeping equipment, facilities, or assets in working condition, including repairs and preventive measures.