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JIT vs. Traditional Costing Differences

JIT costing differs from traditional costing in that it does not track production costs as materials move through the manufacturing process, but rather records costs when units are completed. It also combines raw materials and work-in-process inventory into a single account called raw and in-process inventory, whereas traditional costing separates these stages into different inventory accounts.

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12 views1 page

JIT vs. Traditional Costing Differences

JIT costing differs from traditional costing in that it does not track production costs as materials move through the manufacturing process, but rather records costs when units are completed. It also combines raw materials and work-in-process inventory into a single account called raw and in-process inventory, whereas traditional costing separates these stages into different inventory accounts.

Uploaded by

Pee Cee
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Major difference between JIT costing and traditional costing

 JIT costing does not track the cost of products from raw materials inventory to work-in-
process inventory to finished goods inventory. Instead. JI costing waits until the units are
completed to record the cost of productions.
 JIT costing combines raw materials inventory and work-in-process accounts into a single
account called raw and in-process inventory.

  Traditional Just-in-time

Production Records the costs of products as they Records the costs of products
activity move through the manufacturing process. when units are completed.

Inventory Raw materials inventory, work-in-process Raw and in-process inventory


accounts inventory and finished goods inventory. and finished goods inventory.
Manufacturing Direct materials Direct materials
costs
Direct labour manufacturing overhead. Conversion costs.
  Pull system Push System
  Insignificant or zero inventories Significant inventories
  Manufacturing cells ( work centres. Process structure.
  Multi-function labour Specialized labour

  Total Quality Management Acceptable quality level

  Simple cost accounting Complex cost accounting

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