Podcast
Questions and Answers
Which of the following is NOT a benefit of a JIT system in reducing overhead costs?
Which of the following is NOT a benefit of a JIT system in reducing overhead costs?
- Reduced facility costs due to less inventory storage space required
- Decreased material handling costs
- Increased quality inspection costs to ensure defects are caught early (correct)
- Lower costs associated with the warehouse, such as staff, equipment, and rent
How does a JIT system impact the allocation of overhead costs compared to a traditional system?
How does a JIT system impact the allocation of overhead costs compared to a traditional system?
- Overhead costs increase due to the need for more quality inspections and material handling
- Most overhead costs are converted to direct costs that can be charged directly to a product (correct)
- Overhead costs remain unchanged and are allocated the same way
- Overhead costs are allocated based on the amount of work-in-process inventory
Which of the following is an example of a cost that can now be charged directly to a product in a JIT environment?
Which of the following is an example of a cost that can now be charged directly to a product in a JIT environment?
- Costs of quality inspections
- Depreciation of production equipment (correct)
- Salaries of warehouse staff
- Rent for the warehouse facility
How does a JIT system impact the costs associated with the warehouse facility?
How does a JIT system impact the costs associated with the warehouse facility?
What is the primary focus of a JIT system in terms of reducing costs?
What is the primary focus of a JIT system in terms of reducing costs?
Which of the following is a key advantage of charging depreciation costs directly to products based on machine usage rather than a fixed monthly amount?
Which of the following is a key advantage of charging depreciation costs directly to products based on machine usage rather than a fixed monthly amount?
In a JIT production system, which of the following is a key reason that materials handling costs are reduced compared to a traditional manufacturing system?
In a JIT production system, which of the following is a key reason that materials handling costs are reduced compared to a traditional manufacturing system?
Which of the following is a key advantage of separately metering and tracking the electricity usage of individual machine cells?
Which of the following is a key advantage of separately metering and tracking the electricity usage of individual machine cells?
Which of the following is a key advantage of separately tracking and charging operating supplies expenses to individual machine cells?
Which of the following is a key advantage of separately tracking and charging operating supplies expenses to individual machine cells?
Which of the following is a key advantage of grouping all repair and maintenance costs into the individual machine cells?
Which of the following is a key advantage of grouping all repair and maintenance costs into the individual machine cells?
What is one of the factors that the MRP II system allows, but is directly addressed and reduced by JIT manufacturing methodology?
What is one of the factors that the MRP II system allows, but is directly addressed and reduced by JIT manufacturing methodology?
Which of the following is the most important database in an MRP II system?
Which of the following is the most important database in an MRP II system?
Why is the accuracy of the bill of materials database considered of the highest importance in an MRP II system?
Why is the accuracy of the bill of materials database considered of the highest importance in an MRP II system?
Which database in an MRP II system provides accurate information about product components and is helpful for inventory accountants?
Which database in an MRP II system provides accurate information about product components and is helpful for inventory accountants?
In an MRP II system, which factor allowed by the system contributes to increased waste costs?
In an MRP II system, which factor allowed by the system contributes to increased waste costs?
Which of the following is NOT a type of waste that a JIT system aims to eliminate?
Which of the following is NOT a type of waste that a JIT system aims to eliminate?
What is a key focus of a JIT system?
What is a key focus of a JIT system?
Which of the following is NOT considered a form of waste that a JIT system aims to reduce?
Which of the following is NOT considered a form of waste that a JIT system aims to reduce?
What is the scope of a complete JIT system?
What is the scope of a complete JIT system?
Which of the following statements is true about the implementation of a JIT system?
Which of the following statements is true about the implementation of a JIT system?
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Study Notes
JIT System Benefits and Cost Allocation
- A JIT (Just-in-Time) system minimizes overhead costs by reducing excess inventory and streamlining operations.
- JIT systems allocate overhead costs more directly to products, contrasting with traditional methods that spread costs broadly, potentially obscuring true product expenses.
- In a JIT environment, costs for materials like raw materials can be charged directly to products due to reduced inventory and faster turnaround times.
Impact on Warehouse Facility Costs
- JIT systems significantly lower warehouse-related costs by minimizing storage needs and reducing the amount of inventory on hand.
- Less inventory requires smaller, less expensive warehouse spaces, leading to cost efficiencies.
Primary Focus of JIT System
- The main goal of JIT systems is cost reduction through efficiency and elimination of waste, aligning production closely with customer demand.
Cost Allocation Advantages
- Charging depreciation directly based on actual machine usage instead of a fixed standard can lead to more accurate product cost assessments and more effective cost management.
Material Handling Cost Reduction
- JIT production minimizes material handling costs due to its streamlined processes and reduced need for movement and storage of products.
Advantages of Individual Machine Monitoring
- Separately metering electricity usage in machine cells enables precise cost allocation, leading to better financial accuracy and operational awareness.
- Tracking operating supplies expenses at the machine cell level improves resource management and ensures that costs are aligned with production needs.
Maintenance and Repair Cost Management
- Grouping repair and maintenance costs with individual machine cells provides clearer insights into machine efficiency and related costs, facilitating better maintenance scheduling and resource allocation.
MRP II System and JIT Methodology
- MRP II systems allow for production planning and capacity management, but JIT methodology specifically targets waste reduction along the production process.
- The bill of materials (BOM) database is critical in MRP II systems because it provides vital information on product components necessary for inventory management.
Waste Identification and JIT Focus
- The primary focus of a JIT system is the elimination of various forms of waste, including excess inventory, overproduction, and unnecessary transportation costs.
- Notably, JIT systems aim to reduce all types of waste, though certain perceived inefficiencies may not be classified as waste within the system's parameters.
Scope and Implementation of JIT Systems
- A complete JIT system encompasses all stages of production, from supplier relationships to customer satisfaction, and focuses on seamless processes.
- Effective JIT implementation requires a cultural shift within organizations, fostering a mindset focused on efficiency and continual improvement.
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