A Comparative Study Of JIT And Traditional Cost Accounting Methods

First, the meaning of the JIT system. The timely cost accounting JIT is a accounting method which can eliminate waste. It mainly eliminates waste through sequential production activities, shorter equipment and equipment time, demand driven production plan and high level staff training.

It originated from the world automobile giant Japan Toyota Corporation, and brought about a profound pformation of the world automobile industry, a production management and cost accounting method.

Its basic idea can be summarized as "producing the required products only according to the quantity required when needed," which is the original meaning of the word JustinTime (JIT).

JIT is a demand pull system, customer demand for output to stimulate production.

In this mode of production, production behavior is "pulled" rather than "pushed". Its core is to pursue a zero inventory production system, or to minimize inventory to the production system, so as to achieve the basic goal of reducing costs, so as to achieve the ultimate goal of maximization of profits.

Compared with the traditional manufacturing system, JIT, as a demand pull production system, the basic idea of just in time manufacturing system is that only when the customer demand is produced, and only the quantity required by the customer is produced. Two.

Therefore, in the whole manufacturing process, production is driven by demand, and each process is only produced to meet the needs of the latter process. Compared with traditional manufacturing, the JIT method has the following differences: 1. of inventory.

The primary goal of implementing JIT is to reduce stock inventories to zero inventory levels.

The traditional manufacturing method is a push type manufacturing system. After the completion of a certain process, the raw materials and parts are pferred to the next process for production without considering the needs of the latter process.

In such a system, if production exceeds demand, inventory will be generated.

However, because JIT realizes the synchronization and equalization of production, the inventory is basically zero, even if there is a small amount of stock, it will not occupy a large amount of capital, which will affect the normal production and operation of enterprises and the capital flow of enterprises.

2. manufacturing units and staff skills.

In the traditional product manufacturing process, the equipment is arranged in the workshop department, that is to say, the same type of machine and equipment is arranged in the same workshop, such as parts workshop, assembly workshop, spray workshop and inspection workshop. The product is completed by the same machine in the same workshop, and then pferred to another workshop, the machine continues to process, while the workers receive specialized training only for the operation of the specific machine in the Department. On the contrary, JIT adopts the manufacturing cell mode.

The manufacturing unit usually uses a circular configuration to accommodate a group of machines, and to arrange the machines in the order of the work pieces to form a production line that connects each other, so as to engage in different production operations. Each unit acts as a product or a series of products. After completion of a process, the product is pferred to the next process to continue processing; the workers assigned to the unit carry out comprehensive skills training, and make it a versatile person who is familiar with all the processes through regular rotation of posts, so each manufacturing unit can be regarded as a small factory or factory plant.

3. elastic configuration workers.

In the traditional production system, the system of "fixed membership" is usually implemented, that is, the so-called "one radish and one pit". Compared with a certain equipment group, even if the production volume is reduced, it is necessary for the same operators to make all the equipment run and produce.

In the JIT environment, the number of workers in each production line will be increased or reduced flexibly according to the change of production volume, with as little manpower as possible to complete as much work as possible.

The prerequisites for achieving flexible allocation of jobs are: (1) proper equipment configuration; (2) well-trained, multi skilled workers, namely, "generalists"; (3) regular review and regular revision of standard operation portfolios.

4. quality control (TQC).

Under the JIT production mode, quality management runs through the whole manufacturing process.

Once the product is found defective, it will lead to the interruption of the whole production. In the manufacturing environment of zero inventory, the existence of bad products must not be allowed. Therefore, if there is no total quality management, the decentralization of JIT.5. services can not be realized.

JIT requires simple and rapid service delivery, which requires that the centralized service department be cut down and the personnel assigned to a direct production site. For example, in terms of raw materials, JIT sets up several storage areas, and each storage area is used with the place where the raw materials are used. Therefore, it is unnecessary to set up a warehouse.

Compared with the traditional manufacturing system, product cost management in the three and JIT environment, compared with the traditional manufacturing system, in the JIT environment, some manufacturing expenses which were common to a variety of products have been directly attributable to specific products. Unit type manufacturing, comprehensive training for employees and decentralized service operations are not only the main characteristics of JIT, but also the reason for the change of cost attribution.

The equipment used to produce a certain product scattered in various departments in the past has been rearranged in various units, and each unit only produces one product or part, so the depreciation of equipment becomes a direct attributable cost.

The decentralization of workers and services with multiple skills also increases the attribution of costs. After thorough training, workers in the unit can not only be engaged in the preparation, maintenance and operation of equipment, but also serve as the pportation of work in process between two machines and logistical services to other workers, because the workers in these units are directly engaged in the production of the product, so the labor cost in the unit is direct labor.

Therefore, in the JIT environment, many previous indirect labor can now be directly assigned to a product.

The influence of 1.JIT on the correctness of product cost.

Indirect cost reduction and direct cost increase promote the correctness of product cost.

The direct manufacturing cost of a product can be directly attributable to the product; then the indirect cost is related to a variety of products, so the cost drivers and manufacturing cost rates should be apportioned on various products, but errors will inevitably arise when calculating the rate of distribution and the amount of products to be apportioned.

For the sake of accuracy and convenience in cost calculation, enterprises may choose less cost drivers related to the cost of manufacturing cost operations. JIT manufacturing not only reduces indirect costs, but also changes most of the manufacturing costs into direct costs, thereby reducing the apportionment and improving the accuracy of product cost calculation.

It is important to note that JIT does not pform all indirect costs into direct costs. In fact, even if JIT is implemented, many manufacturing cost operations are still common to all manufacturing units. Only when JIT is combined with activity-based costing can great improvement be made to the accuracy of product costing.

The impact of 2.JIT on the cost allocation of the service sector.

The manager of the service department is responsible for the charge of the service department, while the manager of the production department is related to the cost of service, but it can only exert indirect control on the cost of service. In the JIT environment, many services are decentralized, and the skilled workers (such as engineers and production planners) are allocated directly to the manufacturing cell and trained to enable them to work in the past by indirect labor (such as maintenance personnel), so that many service costs can be directly assigned to the manufacturing unit, and finally can be attributed to specific products, so that managers can better understand the real cost of the products, and at the same time, because they must be directly responsible for the cost of services, they can make more appropriate control over the cost of services. In traditional manufacturing, the managers of the service department and the production department are held by different people. The service department adopts centralized mode to provide logistic services and service costs for the production department.

The influence of 3.JIT on direct labor cost.

When JIT and automation are adopted by manufacturers, the quantity and nature of direct labor costs will change.

For example, the workers in the manufacturing unit can undertake preventive maintenance during the production gap. This action will produce two results: first, the proportion of direct labor in total manufacturing cost has dropped; in the second place, the direct labor is converted from the variable cost to the fixed cost in nature.

These two results will reduce the importance of direct labor cost collection and reporting.

The influence of 4.JIT on stock valuation.

The first accounting problem of JIT elimination is the calculation of product cost and the valuation of inventory. When inventories exist, in order to prepare financial statements, it is necessary to calculate the inventory in accordance with generally accepted accounting principles. However, when there is zero inventory or only a small amount of stock, the valuation of the inventory is not important to the financial statements. In fact, in the JIT environment, the purpose of calculating the cost of products is only to manage the needs, and managers need the correct cost information to make decisions.

The influence of 5.JIT on batching cost method.

Using batch cost method to calculate product cost, when implementing JIT, enterprises should first divide the repetitive production business from the special order, then set up the manufacturing unit to deal with repetitive business. For those products with low demand and therefore no need to set up their manufacturing units, different machines can be combined into one manufacturing cell to produce products or part families that need the same manufacturing process.

Due to the change of manufacturing layout and the reduction of production volume (as a result of reducing the inventory of WIP and finished goods), setting up the cost list for each batch of products has become unrealistic. The cost can be collected in accordance with the manufacturing unit, thus simplifying the calculation of the batching cost method. At the same time, because the basic idea of JIT is to drive production by demand, the lead time of the product is greatly shortened, and tracing every product through the manufacturing cell is not easy. Therefore, in fact, the batch cost method in the JIT environment has a step-by-step nature.

The influence of 6.JIT on the step cost method.

Under the traditional step by step cost method, the production process is divided into relatively independent steps. The semi finished products and finished products produced at each stage are calculated as objects of cost. The manufacturing cost of the same period is collected according to the production steps, and the total cost of the period is divided into the output of the current period, namely the unit cost.

Unit cost plays an important role in the valuation of semi finished goods and finished goods.

Although the calculation of unit cost is simple, because of the existence of initial and final products, it involves the distribution of manufacturing costs between semi-finished products and finished products, so the term "yield" usually includes the output of finished products and the corresponding output during a certain period of time, that is, the semi finished products will be converted into finished products at the time of completion.

The calculation of unit cost is rather cumbersome, especially in the FIFO method, because the calculation of production depends on the weighted average method or the first in first out method.

Since the implementation of zero inventory in JIT manufacturing, the calculation of unit cost is relatively simple. As long as the total cost of a certain process is divided into output in a certain period without the need to calculate the approximate output, there is no need to consider the initial cost, so JIT simplifies accounting work.

The accounting method of the four and JIT cost method is JIT, the method of calculating the inventory of products is called JIT cost method.

Since the JIT inventory system aims at zero inventories, it does not set up a semi finished inventory account, so its accounting procedure is very simple.

Enterprises adopting JIT inventory system include direct labor in manufacturing costs, thus reducing many records of labor costs.

Some enterprises also adopt the "raw materials and semi finished goods inventory" (RIP) subject instead of the original individual raw materials inventory and semi finished products.

The simplification of accounting treatment is based on the fact that the main purpose of the JIT system is to completely eliminate or reduce inventories, to integrate inventory items into one and further simplify accounting treatment. In the simplification process, the raw material records are also cancelled because the raw materials are directly credited to the RIP stock account when they are stocking, and only when the products are completed.

The JIT cost method usually does not set detailed cost records. The raw materials purchased are pferred to the production department immediately upon receipt. When the product is completed, the cost of raw materials should be pferred to the finished products account.

As for the cost of labor and manufacture, the cost of production is merged into production cost, and the actual production cost is credited to the debit of the account; and when the apportionment is made, it is credited to the debit of the finished product account and the credit of the production cost account.

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