- CHAPTER 6 -

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
  Understand the JIT philosophy
 Know and understand the five key elements involved in t he
operation of a JIT system
 Differentiate the JIT system from the traditional costing
system

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
  Just in time (JIT)
 means that raw materials are received just in time to go
into production, manufactured parts are competed just in
time to be assembled into products, and products are
completed just in time to be shipped to customers.
 originated in Japan and is being increasingly utilized by
American manufacturing companies.
 characterized by decisions made by companies to
intentionally maintain relatively small inventory levels.
 often referred to backflush costing

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
  Just in time (JIT)
 Five key elements in the operation of a JIT system
1. A company must learn to rely on a few supplies which are
willing to make frequent (even daily) deliveries in small lots.
2. A company must improve its product flow lines by creating an
individual flow line for each separate product.
3. A company must reduce the setup time between production
runs.
4. A company must develop a system of total quality control (TQC)
over its parts and materials.
5. A company must develop a flexible work force.

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
  Just in time (JIT)
 There are basically three major differences:
Traditional Costing JIT Costing
• Using separate accounts for • Combines these into Raw
Materials and WIP and in Process account
• Direct labor is considered a • Direct labor and factory overhead are
minor cost time usually charged to a Conversion Cost
or direct to COGS account
• Overhead is applied to • Overhead is applied to products
products as they are being when it is completed, labor and
produced and recorder to overhead is added to COGS
WIP account

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
  Backflushing
 also known as backflush costing or backflush accounting
 shortened version of the traditional method of accounting
for cost
 it is to simplify and to reduce the number of events that are
measured and recorded in the accounting system
 eliminates some of the accounting steps under traditional
costing and some of the general ledger accounts are
combined into one
 some or all elements of the cost of output are determined
only after the production is completed
© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
 “When the time is right,
I, the Lord, will make it
happen.”
Isaiah 60:22

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales
 ba_grosales.ibsma.ph.education

© Cost Accounting and Control 2019 Edition De Leon Prepared by: Ms. Glenn Grace C. Rosales