JIT wants (1) flexibility on a shop floor, and (2) flexibility in price accounting practices (Holbrook, 1985), due to the fact quite a few traditional characteristics in the production technique should be either eliminated or altered to a important extent. These characteristics are as follows (Maskell, 1986b):
1. WIP is eliminated by reducing batch sizes (preferably to just one).
2. Raw materials inventories are eliminated by requiring suppliers to deliver directly towards the shop floor just in time for use in the manufacturing process.
3. Scrap and rework are eliminated by an emphasis on total quality control of design, from the manufacturing process, and of materials.
4. Finished items inventories are eliminated by reducing lead times, so that, in effect, all solutions are created to order.
5. Materials handling prices are eliminated by redesign in the shop floor to permit materials to move directly in between adjacent jobs centers.
JIT & Price Accounting Procedural Changes
Major changes in price accounting procedures for manufacturing businesses are dictated in 10 separate areas by the introduction of JIT. These 10 areas are as follows (Maskell, 1986b):
1. Collection of prices against jobs orders. After batch sizes are reduced, the range of batches processed increases. When this situation occurs, it's no longer possible to co
2. Collection of materials costs. With materials delivered on the shop floor just in time for use, the allocation of materials prices among flow orders becomes increasingly difficult.
10. Monthly reporting. While monthly reporting remains a financial accounting requirement, these kinds of reporting is counterproductive to manufacturing efficiency under JIT, simply because the objective of an even production flow is not consistent with monthly reporting, and its attendant production concentrations.
Required Accounting Software Modules
Holbrook, W. (1985). Practical accounting advice for just in time production. Journal of Accounting and EDP, I(Fall), 42 47.
7. Employee payroll. The employee payroll application module maintains the compensation records on all people applied by a firm. The employee payroll module provides facts towards work price computer software module. The software package module made by Peachtree Software, in addition to maintaining employee compensation records, computes, records, and reports all federal and nation payroll related taxes for each individual employees as well as the firm, prints employee pay checks, and prepares employee W Two types for as much as 3,900 employees.
The typical manufacturing business requires eight separate, but interrelated, accounting software package modules. These modules are as follows: (1) general ledger; (2) accounts receivable; (3) client invoicing; (4) accounts payable; (5) inventory maintenance; (6) fixed asset; (7) employee payroll; and (8) employment cost.
4. Accounts payable. The accounts payable computer software module maintains a firm's vendor financial account records. Details is provided by this software module on the career cost computer software module. The software package module made by Peachtree Computer software each maintains vendor financial account records, and prints checks for your payment of as much as 14,000 vendors.
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