A Firm That Has Implemented JIT Had the Following Transactions

question 46

Multiple Choice

A firm that has implemented JIT had the following transactions: Which of the following would NOT be an entry under the backflush system, assuming the second trigger point is the completion of goods?

• A) Materials and In Process Inventory 40,000 Accounts Payable 40,000
• B) Work-in-Process Inventory 40,000 Materials Inventory 40,000
• C) Conversion Cost Control 46,000 Wages Payable 6,000 Accounts Payable 40,000
• D) Cost of Goods Sold 82,000 Finished Goods Inventory 82,000

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Definitions:

Profit-Maximizing Price

The price level at which a firm can sell its product to earn the highest possible profit, given its cost structure and market demand.

Haircut

A financial term referring to a reduction in the value of an asset or the amount of a loan.

Total Costs

The complete costs associated with the production of specific goods or services, including fixed and variable costs.

Profit Maximizing

A company’s strategy aimed at adjusting their level of output until they achieve the highest possible profit.