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Essay / Research Paper Abstract
This 10 page report discusses just-in-time (JIT) business philosophy which can result in much improved cost accounting. Essentially all businesses experience some aspect of the same logistics issues, whether their business is health care, airlines, or manufacturing. More and more of those companies have come to realize that instead of cutting staff or sacrificing quality of product, JIT allows a way to save just as much money, if not more, while maintaining the workforce and the quality of the product or service. Because JIT processes as applied to inventory reduces inventory to essentially insignificant levels and groups materials according to product lines rather than operational functions, it changes what were indirect, overhead costs to direct product costs. Bibliography lists 8 sources.
Page Count:
10 pages (~225 words per page)
File: D0_BWjit.rtf
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Unformatted sample text from the term paper:
philosophy which can, in turn, result in much improved cost accounting. The first step entails financial executives adopting the underlying JIT principle of continual improvement, in both the organization and
the cost management process. JIT philosophies will significantly affect the identification of cost drivers (non-value-added processes), the number of product cost elements, application of product costs, and the nature of
performance measures. Clearly, inventory and inventory management systems are examples of the type of necessary daily functions that can see a great improvement in larger efficiencies through adoption of
just-in-time procedures. In fact, the only processes that do not truly lend themselves to just-in-time are: direct labor efficiency, utilization, productivity, and machine utilization.
Essentially all business experience some aspect of the same logistics issues, whether their business is health care, airlines, or manufacturing. And more and more of those companies have come
to realize that instead of cutting out employees or lessening the quality of product, JIT allows a way to save just as much money, if not more, while maintaining the
workforce and the quality of the product or service. According to Bihmani and Bromwich (1991), managerial accountants may have to change their costing
methods when accounting for just-in-time systems. Conventional costing techniques involve dividing costs into separate categories to control production costs, while JIT costing techniques determines cost drivers that are related to
production costs. Bihmani and Bromwich (1991) point out that: "Instead of dividing costs into more categories, JIT focuses on the reduction of product costs through redesign and process improvement. JIT
may also convert certain indirect costs into direct costs" (pp.31). Theories of Just-in-Time Just-In-Time manufacturing is an efficient and integrated manufacturing system that
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