Just in Time and Backflush Costing
Just in Time and Backflush Costing
Backflush
Costing
Just in Time
Costing System
It means that companies purchased from supplier and it will arrive just in time to be
used in the production, partly assembled units arrives at the production facility just in
time to be shipped to customers
Customer demand triggers production
Its purpose is to minimized the cost of handling the raw materials and other
inventories such as finished goods and work in process
Ultimate advantage of jit is the satisfaction of customers for you will be delivering the
goods they ordered just in time they actually need it.
Backflush Costing
Backflush costing methods accounts the company’s inventories backward by
calculating the cost of products after are sold, finished or shipped to
customers rather than accounting it before and during the production
process.
It does not follow the generally accepted accounting principles
Trigger points
It refers to a stage in a cycle going from the purchase of raw materials to the sale of the finished goods
at which journal entries are made in the accounting cycle