Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 more interesting question is whether this and other benefits outweigh the costs of JIT, thereby increasing adopters profitability.
Early results are mixed, but evidence suggests that if the adopter has a major customer, that customer may have extracted any benefits of JIT in the form of price concessions. In contrast, adopters with no major customers were more likely to retain
the financial benefits of JIT, and their profitability was enhanced relative to non-adopters
(Balakrishnan, R, Linsmeier, T. J. and Venkatchalam M. (1996) Financial benefits from JIT adoption Effects of customer concentration
and cost structure The Accounting Review (April):
183–205). The subsection on product-costing benefits of JIT points out that JIT can increase the accuracy of product costing by (1) eliminating activities that generate indirect costs (e.g. warehousing,
material handling, and (2) increasing direct tracing of costs formerly classified as OH (e.g. costs of setups and maintenance performed by multiskilled workers can be traced directly to the manufacturing cell.
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