Chapter 5 T 12.

Normal costing system accumulates

factory overhead costs based on a
T 1. A Factory overhead includes all predetermined overhead rate.
factory costs in the manufacturing
process. T 13. Departmentalized overhead rate is
more appropriate, if the services provided
T 2. Factory overhead is also known as by several departments are highly
factory burden. differentiated.

T 3. Indirect materials are materials not T 14. Budget is a detailed plan, expressed
directly used in the production of goods. in quantitative terms, about business
operations for a specific period.
T 4. Overtime premiums of factory
employees are an example of factory T 15. Actual costing is also known as
overhead.. historical costing.

T 5. Factory overhead is charged to F 16. Indirect labor is a labor cost of those

expense when the product is produced. employees who are directly associated
with the production process.
T 6. Classifying factory overhead costs
based on behavior is one way to control F 17. Plant-wide method to determined
such costs. overhead rate is expensive and difficult to
apply.
T 7. The allocation bases should be
related to the functions represented by the T 18. Budgeting is the process of coming
factory overhead costs being applied. up with a budget.

T 8. The predetermined factory overhead T 19. Factory overhead cost requires

rate is determined at the beginning of further analysis compared to direct
each period. materials and direct labor because of its
complexity.
T 9. The Departmentalized overhead rate
is more accurate product costing when a T 20. Plant-wide uses single overhead
company produces different products that rate to allocate all of its factory overhead
require a variety of processes. costs to jobs, products or departments.

F 10. The Normal Costing system T 21. Plant-wide overhead rate is

determined factory overhead costs as they appropriate to use, if the company
occur simultaneously with the manufactures similar products.
manufacturing operation, but the total of
these costs is known only as the operation T 22. Departmentalization of factory
has been completed. overhead provides more accurate costing
of jobs and products because it uses
F 11. Cleaning supplies used in the factory different overhead rates for charging
are an example of direct materials. factory overhead costs..

T 23. Indirect departmental expenses are

costs that are allocated to other
departments that indirectly benefited the T 36. Direct method allocates service
said costs. department cost directly to the revenue-
producing/operating areas without
T 24. The sewing department is an recognition of service provided among the
example of servicing department. service departments.

T 25. Direct Departmental expenses are T 37. Reciprocal method is the most
costs that can be immediately charged to accurate among the three methods.
a particular department because they are
directly traceable with the department that F 38. The direct method is the simplest
benefited the said costs. and the most accurate method compared
to other service allocation methods.
T 26. Producing department is responsible
in the actual manufacture of products. F 39. Step method allocation starts with
the service department that provides the
F 27. The purchasing department is an least number of services to other service
example of producing department. departments.

F 28. Factory overhead includes direct T 40. If the factory overhead variance is
materials and direct labor. material, it is closed to Cost of Goods Sold
Account.
T 29. Expected capacity refers to the level
based on expected capacity utilization for T 41. Spending variance occurs when the
the budget period actual amount of factory overhead
incurred in the period is different from the
T 30. Theoretical capacity is a production standard amount that had been budgeted.
in full efficiency,
T 42. Overhead variances do not exist
T 31. Practical capacity refers to plant or when actual costing is used.
department's capability to produce with an
allowance for internal factors. T 43. A predetermined overhead rate is
calculated using the budgeted overhead
F 32. Ideal capacity considers operating cost and budgeted activity.
interruption such as machine breakdowns
and holiday shutdowns. F 44. Actual costing requires
predetermined overhead rates.
F 33. Practical capacity is also known as
ideal capacity. T 45. Under the step down method, all
service department costs are eventually
T 34. Normal capacity is a capacity driven allocated to production departments.
by customers or business demand and not
by maximum capacity. T 46. The order in which service
department costs are allocated is
T 35. Normal capacity is equal to the important, under step-down method.
practical capacity less loss of productive
capacity due to external factors. T 47. After service department's cost have
been allocated to other departments, no
costs are re-circulated back to that service T 6. Activity-based costing requires the
department, under step down method. identification of cost drivers.

T 48. The advantage of actual costing T 7. The first stage in ABC system is to
over normal costing is that the company identify and classify the major activities
need not forecast the level of productive and allocates overhead costs to
activity for the year. appropriate cost pools.

T 49. The direct method ignores the fact T 8. The use of plant-wide factory
that some service departments provide overhead rate assumes that the activities
service to other service departments. causing overhead costs are the same
across all departments and products.
F 50. The term over-applied is used in
actual costing. T 9. Under ABC, the manufacturing costs
will be sorted by activities.
F 51. Normal costing incomes are less
than actual costing income. T 10. Under ABC, it is assumed that
activities use resources or cause costs.
F 52. When allocating service department
costs, companies should use actual costs T 11. Using plant-wide factory overhead
rather than budgeted costs, and separate rate, factory overhead costs are allocated
rates for variable and fixed costs. to all products by a single factory
overhead rate.
F 53. Under-applied overhead indicates
inefficient operations. F 12. ABC is much easier to apply than
single plant-wide rate method.
Chapter 6
F 13. ABC can only be used to allocate
F 1. ABC system uses only a single basis factory overhead costs.
of allocation.
F 14. ABC is only applicable for
F 2. In a more automated environment, companies who are producing one
direct labor is sometimes the appropriate product
basis of assigning overhead costs to
products. T 15. ABC method can be used to allocate
selling and administrative costs to each
T 3. A plant wide factory overhead rate is product
computed by dividing the total budgeted
factory overhead costs by the plant-wide T 16. Multiple production department
allocation base. factory overhead rates are most
protopriate when production departments
F 4. Activity-based costing is only used in differ in the manufacturing
JIT operations.
T 17. Using plant-wide factory overhead
F 5. ABC system focuses on unit of rate, the total factory overhead costs are
production. applied to all products is the same.
T 18. Cost drivers are activity that causes T 29. ABC is the best approach for
resources to be consumed allocating manufacturing overhead costs
for a factory with automated equipment
T 19. The use of differences factory and a significant variation of services.
overhead rate, distorts product costs when
there are in the factory overhead rates T 30. A. Company the uses only volume
across different production departments based approach will over allocate
and when products require diferent ratios overhead to its low volume products.
of allocation base usage in each
production department T 31. Activities that drive resources are
known as activity drivers.
F 20. ABC conforms with GAAP.
T 32. In ABC, the factory overhead cost
F 21. Multiple production department per unit will depend on the number of units
factory overhead rates are more accurate in a batch.
and less costly than plant-wide factory
overhead rates. F 33, Value added activities add cost to
the product and also increase its market
T 22. Management depends on the value.
accuracy of the factory overhead cost
allocation to make decisions regarding T 34. Product sustaining activities are
price setting. needed to support an entire product line.

F 23. ABC system can be used only in job F 35. Multiple production department
order costing system. factory overhead rates are most usefil
when production departments are very
T 24. Under Traditional costing, similar in their manufacturing processes.
manufacturing overhead costs are
predominantly assigned on the basis of F 36. ABC does not change the amount of
direct labor cost. manufacturing overhead cost.

F 25. Using plant wide overhead rate F 37. In ABC system, it is assumed that
method, it assumes, that activity causing products use resources or cause the
factory overhead costs are different across incurrence of costs.
different departments.
F 38. Product sustaining activities must be
T 26. Before costs are allocated to cost performed for each unit of product that is
pools, the cost driver of cost pool must be made.
identified.
T 39. In ABC system, direct materials
T 27. Activity means any event, action, used would typically be classified as a
transaction or work sequence that incurs unit- level cost.
costs when producing a product.
T 40. Direct labor hours would be the least
F 28. Batch-level activities are activities favorable basis for allocating
performed every time a service is manufacturing overhead costs for a
performed or product is made. factory with automated equipment and
significant variation of services.
 F 53. Activity-based costing is the same
T 41. The plant-wide factory overhead rate as traditional costing.
is determined by dividing the total
budgeted factory overhead costs by the T 54. When using traditional costing
plant-wide allocation base. approach, low volume item requiring a
significant amount of special handling will
T 42. Batch-level activities are performed be assigned too little manufacturing
each time a batch of goods is processed. overhead.

F 43. ABC system has a tendency to F 55. The setup cost is best allocated
distort product costs. directly to products using machine hours

T 44. Direct labor hours are not a cost T 56. In traditional costing system, the
pool that is regularly used in ABC method factory overhead costs are applied on the
basis of volume related measures.
F 45. Product level activities are required
to support or sustain an entire production F 57. ABC system can only be used in
process. process cost system.

T 46. Cost pool is a collection of costs to F 58. In traditional costing system, all
be assigned to a set of cost objects. factory overhead costs are easily
traceable to the goods produced.
T 47. In traditional costing, the unit cost of
a high volume and small products tend to T 59. In traditional costing, the unit costs
be understated, while the unit cost of low of high volume and large size products
volume and large products is overstated. tend to be overstated, while the unit cost
of the low volume and small products tend
T 48. Activity rates are computed by to be understated.
dividing the cost budgeted for each activity
pool by the estimated activity base for that F 60. ABC system uses the direct labor as
pool. its primary cost driver.

T 49. Activities that are performed each Chapter 7

time a unit is produced are known as unit
level activities F 1. An oil refinery company will normally
use job order costing to accumulate
T 50. Direct labors should not be used as production costs.
a measure of activity in an activity. based
costing T 2. Under job order costing system, costs
are accumulated per batches,
T 51. Cost driver is an activity that has a
high correlation with the consumption: of F 3. Job cost sheet contains records of
resources in the activity cost pool. actual direct materials, direct labor and
factory overhead incurred in completing a
F 52. ABC system cannot be used by a job.
service type of business.
T 4. The Cost of Goods Sold and Work in F 15. A debit balance in the me factory
Process Inventory accounts has a debit overhead account at year end means that
balance. factory overhead is over-applied.

F 5. A company that manufactures large T 16. A small appliance repair shop will
quantities of similar products will use job normally use job order costing system.
order costing system.
T 17. Job order costing is appropriate for
T 6. A job order costing system provides textbook publishing companies.
for a separate record of the cost of each
particular quantity of products that passes T 18. Job order costing manufactures
through the factory. heterogeneous products.

T 7. Under normal job-order costing F 19. Job order costing system is not used
system, factory overhead is applied using by service companies.
predetermined rate times actual input.
T 20. Materials are transferred from the
F 8. Normally a job cost sheet is not storeroom to the factory in response to
prepared for a job until after the job has material requisitions.
been completed.
T 21. A company the manufactures
T 9. Job cost sheets contain entries for custom made gowns will use job order
actual direct materials, actual direct labor costing to accumulate production costs.
and actual factory overhead cost incurred
in completing a job F 22. In a job order costing system,
indirect materials are charged to a specific
F 10. Each account in the cost ledger in job.
the job order system is called a job cont
sheet. F 23. When goods are sold, their costs are
transferred from Work in Process to
T 11. The entry to record the depreciation Finished Goods Inventory.
of factory equipment would include debit
of Work cord thee de inventory account F 24. Under normal job order costing
and Credit Accumulated Depreciation. system, all the costs appearing on a job
cost sheet are actual costs.
F 12. The term "normal costing" refers to
the use of job order costing system. F 25. Under normal job-order costing
system, actual factory overhead is applied
T 13. The entry to record the cost of goods at the end of the period.
manufactured includes a debit to work in
process account. T 26. Immaterial amount of under-applied
factory overhead is close to COGS
T 14. The materials requisition form account.
serves as the source documents for
debiting the accounts in the materials T 27. When factory overhead cost is
ledger. applied to a job, the work in process
account is debited.
T 28. A document that contains all
information about the costs of a specific F 40. When indirect labor is applied to a
job is called a job order cost sheet. job, the factory account is debited.
overhead control
T 29. Non-manufacturing costs are
considered as an expense under the job T 41. A beverage manufacturer is more
order costing system. when incurred likely to use process costing than job order
costing.
F 30. When indirect materials are
requisition, the work in process account is T 42. Indirect labor costs are not charged
debited to a specific job, but rather are included in
the factory overhead.
T 31. Job order costing may be used by
service companies. T 43. A manufacturer of customized shoes
is more likely to use a job order costing
T 32. One reason why factory overhead system than process costing.
may be over-applied is that the estimated
factory overhead may be too high. T 44. Non-manufacturing costs are
expensed outright.
F 33. Job order cost sheet is only
prepared when a job is already completed. T 45. The two reasons why factory
overhead may be under applied are: (1)
F 34. Factory overhead is over-applied if the estimated factory overhead cost may
actual factory overhead costs are greater be too low, and (2) the estimated base
than the factory overhead applied to work may be too high.
in process.
F 46. When materials are put into
T 35. Under or over applied manufacturing production, the materials account is
overhead at year-end is most commonly debited.
charged or credited to Cost of goods sold
account. F 47. Under normal job-order costing
system, actual factory overhead is applied
T 36. A company that manufactures small at the end of the period.
quantities of identifiable products will use
job order costing system. Chapter 8

F 37. Job order costing is used in T 1. Abnormal Spoilage is accounted as

manufacturing companies and process period costs.
costing is used in service companies.
T 2. Defective unit is a unit that is rejected
T 38. A material (significant) amount of at quality control inspection but can be
under-applied factory overhead is close to reworked.
COGS and Finished Goods Inventory
account. T 3. Abnormal defective unit reworking
costs are a considered as period costs.
T 39. A debit balance in the Factory
Overhead account at year end means that F 4. Normal spoilage is considered a
overhead was under-applied. period cost.
T 5. Normal spoilage is controllable to a F 16. The journal entry to record normal
limited extent. spoilage specifically identified to specifie
job includes a debit to Work in Process
T 6. If the rework to correct defective units inventory.
is common to all jobs, Work in Process
account should be debited for the cost of T 17. The cost of abnormal spoilage which
the rework. is common to all jobs should be charged
to loss account during the period of
T 7. The journal entry to record normal spoilage.
spoilage specifically identified to specific
job includes a credit to Work in Process F 18. Spoilage is a substandard product
inventory. that can be reworked.

F 8. The journal entry to record the normal T 19. Normal spoilage is inherent in the
spoilage not specifically identified to a production process and it arises from an
particular job includes a credit to Work in efficient operating condition.
Process Inventory.
F 20. Spoiled units are the same as
T 9. Spoilage occurring on specific jobs defective units.
should be considered in computing
predetermined factory overhead rates. F 21. Material left over when making a
product is called spoilage.
T 10. The rework cost of normal defective
units which is specifically identified to T 22. The rework cost of normal defective
specific job should be assigned to FOH units which is common to all jobs should
control. be assigned to FOH control.

F 11. The net cost of normal spoilage T 23. Abnormal spoilage is a spoilage that
which is specifically identified to specific is in excess of forecasted spoilage.
job should be assigned directly to the jobs
that cause the spoilage. T 24. The sale of scrap would be usually
recorded as a decrease in FOH control.
T 12. The cost of normal spoilage would
be added to the cost of the good units T 25. The journal entry to record the
produced. normal spoilage not specifically identified
with a particular job includes a debit to
T 13. If rework to correct defective units FOH control.
resulted from the exacting specifications of
the order, Factory Overhead should be T 26. Spoilage occurring not on specific
debited for the cost of the rework jobs should be considered in computing
predetermined factory overhead rates.
T 14. Spoiled units are units that cannot
be economically be brought back in good T 27. A Defective good is a substandard
state. product that can be reworked.

F 15. Abnormal spoilage is a spoilage that

can be planned or forecasted.
F 28. There is no distinction between the unit costs of ending inventories relate only
scrap attributable to specific job and scrap to work done during the current period.
common to all jobs.
T 7. Process costing is used to account for
T 29. If the scrap cannot be identified or products that needs further processing.
traceable to a particular job, the sales
proceeds are credited to the factory T 8. Using the weighted average, if
overhead control account and indirectly materials are added at the start of the
affects the overhead rate. process, the EUP for materials is equal to
the units completed and transferred.
T 30. Normal scrap is accounted for
separately from abnormal scrap. T 9. EUP calculations are necessary to
allocate product costs between units sold
F 31. The cost of abnormal spoilage would and ending work in process.
be added to the cost of the good units
produced. T 10. In Process costing, the cost per unit
in a department is found by apreading the
Chapter 9 period's production costs over the
production activity
T Equivalent units of production are
computed to assign costs to partially F 11. Process costing is used to account
completed units. for raw materials that are converted
directly to finished goods.
T 1. Process costing is applicable when
manufacturing heterogeneous products. T 12. Process costing is used to account
for large numbers of identical peutacte
F 2. The flow of costs through the that are produced in a continuous basis.
manufacturing accounts is basically the
same in both job order and process T 13. The costs of one department
costing become part department under process
costing of the coats of the next
T 3. The EUP will be the same under FIFO
method and weighted average method if T 14. In process costing system, units
there is no beginning work in process transferred to the next processing
inventory. department are presumed to be 100%
complete with respect to the work
T 4. The weighted average method performed by the transferring department.
combines work in process beginning and
started in process finished and transferred T 15. The FIFO method does not include
units. the work in process beginning inventory
cost in computing the unit cost.
T 5. Using the process costing, the
companies will use separate work in T 16. The weighted average method
account for each production department. includes the work in process beginning
inventory cost in computing the unit cost.
F 6. Under the weighted average method,
the equivalent units used to compute the F 17. The weighted average method
assumed that units in work in process
beginning inventory are the first units to be
transferred. T 28. if 5,000 units of materials enter
production during the first year of
T 18. The FIFO method assumed that operations, 3,400 of the units are finished
units in work in process beginning and 1,600 are 75% completed the total
inventory are the first units to be equivalent units of production would be
transferred. 4,600.

T 19. The only difference in the F 29. The costing method that includes
computation of EUP between the FIFO the work in process beginning inventory
and weighted average method is the cost in the computation of unit cost is
computation of work in process, beginning FIFO.
units EUP.
T 30. if 20,000 units of materials enter
T 20. Continuous production losses are production during the first year of
assumed to occur uniformly throughout Operations, 12,000 of thes of produ
the process. finished and 8,000 are 25% incomplete
the total equivalent units of production
F 21. Discrete production losses are would be 14,000
assumed to occur uniformly throughout
the process. T 31. One of the similarities of process
costing is similar to job-order coating is
T 22. Discrete production losses are that it assigns production to units of
assumed to occur at the specific point in output.
production process and it will be detected
only when the firm performed a quality T 32. EUP is the number of completed
control inspection. units that could have been produced from
the inputs applied in the process.
F 23. The costs of abnormal, continuous
lost units are absorbed by completed and F 33. Companies that use a process
remaining inventory units. costing method would eliminate the
finished goods inventory account.
T 24. The costs of the normal continuous
lost units are absorbed by the started in T 34. The costing method that excludes
process finished and transferred units and the work in process beginning inventory
remaining work in process inventory. cost in the computation of unit cost is
FIFO method.
F 25. A continuous lost is assumed to
occur at a specific point in the production T 35. Using the FIFO method, if 16,000
process. units which are 30% completed at Aug 1:
56,000 units are completed during August,
F 26. Abnormal spoilage is accounted in and 8,000 units were 75% completed at
the computation of EUP. August 30, the EUP is 66,800.

F 27. If the products of a manufacturing F 36. Job order cost sheet is the report
process are produced to customer used to accumulate costs under process
specifications, a process cost system is costing system.
more appropriate than job cost system.
F 37. Both job order and process cost F 47. Both process and job cost system
system use equivalent units of production maintain perpetual inventory accounts with
to determine costs. subsidiary ledgers.

T 38. Conversion costs are usually T 48. Process costing is applicable to

incurred evenly throughout a process companies engaged in construction of
roads and bridges.
T 39. In computing the unit cost under
weighted average method, prior period T 49. Process costing is applicable to
costs are combined with current period companies engaged petroleum production
costs.
F 50. Process costing system is used by
F 40. Using the FIFO method, if 10,000 companies that accumulate costs per job.
units which are 30% completed at Aug 1;
16,000 units are completed during August, T 51. EUP is equal to the number of whole
and 4,000 units were 75% completed in units that could have been completed if all
August 30, the EUP is 16,000. work of the period had been used to
produce whole units.
F 41. Using the FIFO method, if 10,000
units which are 30% completed at Aug 1: T 52. The units in beginning work in
16,000 units are completed during August, process inventory plus the started in
and 4,000 units were 75% completed in process units must be equal to the units
August 30, the started in process in transferred out of the department plus the
August is 10,000. units in ending work in process inventory.

T 42. The hybrid costing method is F 53. Process costing also uses job cost
appropriate where products manufactured sheet to accumulate cost data.
have different direct materials but similar
processing techniques. T 54. Unit cost is computed in the
weighted average method by dividing the
T 43. Process costing method is current period cost by the EUP.
applicable to products that are
manufactured in a continuous mass F 55. Unit cost is computed in the FIFO
production. method by dividing the current period cost
by the EUP.
F 44. Process costing is applicable to
constructions of houses according to T 56. Weighted average method is a
customer specifications. method that commingles costs of two
periods.
T 45. Cost of production report helps the
management control the cost of T 57. The cost of production report reports
production. the cost charged to production and the
costs allocated to finished goods and work
F 46. EUP of FIFO is higher than EUP in process.
calculated using the weighted average
method T 58. If the principal products of a
manufacturing process are identical, a
process costing system is more T 1. In a just-in-time (JIT) system, quality
appropriate than a job order cost system. of product is determined continually during
the manufacturing process.
T 59. In process costing system, the cost
of one processing department becomes F 2. JIT system objective is to have zero
part of the cost of the next processing inventories.
department.
F 3. JIT system utilizes long lead time and
T 60. Conversion cost is equal to direct few deliveries of inventory.
labor cost plus the factory overhead.
F 4. Backflush costing eliminates the need
T 61. Companies that use a process cost for journal entries.
system would establish a separate Work
in Process inventory account for each T 5. Backflush costing uses two inventory
manufacturing department. accounts: raw materials and a combined
work in process and finished goods.
F 62. Cost of production report reports the
cost of goods sold. T 6. Production facilities and workers are
rearranged into manufacturing cells under
T 63. Under both job order and process JIT system.
costing methods, the journal entry to
leverd the completion of production will F 7. Backflush costing requires more
involve crediting work in process inventory allocation of costs than traditional costing.
account.
T 8. JIT system objective is to have zero
F 64. Process costing uses job cost sheet defects.
to accumulate cost data.
F 9. Under backflush costing, there are
F 65. In process costing system, the three main inventories, the raw materials,
Finished Goods Inventory account work in process and finished goods
recorded for every unit completed in every inventory.
department.
T 10. Backflush costing is a streamline
T 66. Under both job order and process accounting system.
costing, factory overhead costs are
included in the computation of unit product T 11. In a JIT system, operations only
costs. respond to customers' orders.

T 67. One of the primary uses of cost of F 12. JIT philosophy indicates that
production report is to assist management suppliers should be eliminated
in controlling production costs.
T 13. Backflush costing uses twis
F 68. Process costing uses the same inventory accounts: raw materials and
journal entries found under job-order combine work in process and finished
costing system. goods account.

Chapter 10
F 14. In JIT, raw materials are delivered T 27. In a JIT system, the quality of each
less frequently than in a traditional costing product begins with employees.
system.
F 28. In a JIT system, the quality of each
F 15. In a JIT system, there are more product begins with inspection of finished
transactions to record than there are in goods inventory.
traditional system
F 29. In JIT system, the journal entry to
F 16. The JIT system philosophy views record conversion costs would include a
inventory as a necessary buffer to protect debit to raw in process inventory account,
against process problems.
T 30. Trigger point indicates when journal
F 17. JIT philosophy indicates that value entries are recorded in a backflusi costing
added activities should be eliminated system.

T 18. JIT philosophy indicates that storage T 31. In a JIT system, the quality of each
should be eliminated. product begins with the employees of
company's vendors.
F 19. Backflush costing is a demand push
approach. F 32. One of the JIT system philosophies
is that each laborer performs a singe task,
T 20. In a JIT system, the work in process thereby allowing that person to reach his
and raw materials inventory accounts are maximum potential.
combined.
T 33. One of the JIT system philosophies
T 21. JIT system uses manufacturing is that machine operators are expected to
cells. run different types of machines, help in
setting up production runs, and repair any
F 22. In a JIT system, direct labor is machine that need maintenance.
eliminated as a separate cost category.
T 34. JIT system strives for zero defects.
F 23. Backdlush costing eliminates the
need for journal entries. T 35. Reducing the cycle time is one of the
objectives of JIT system.
T 24. In a JIT system, the journal entry to
record raw materials purchases would T 36. Raw materials inventory and work in
include debit to raw materials inventory process inventory is combined in JIT
account. system..

T 25. A push system of inventory T 37. Reducing inventory to the lowest

production where goods are produced in possible levels is a major focus of JIT
anticipation of customer orders. system.

T 26. Under JIT system, ordering costs F 38. JIT system philosophy does not
are minimized by entering into long term focus on finding the total lowest price for
contracts with suppliers. purchase parts.
F 39. JIT system strives for zero
inventories.

F 40. JIT system originates from Japan.

T 41. JIT system utilizes long lead time

and few deliveries.

T 42. JIT system believes in developing a

long term relationship with the suppliers.

F 43. In a just-in-time (JIT) environment,

the optimal situation is to have only one
vendor for any given item.

T 44. Backflush costing requires fewer

allocations than traditional accounting
methods.