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Compare and contrast JIT and ABC methods

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What are some of the main differences between just-in-time processing and activity based costing? Why has JIT become so popular in some industries? Why haven't all of ABC processes moved to JIT? Toyota was one of the first companies to use JIT on a large scale, would it make sense to use JIT and ABC?

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Solution Summary

This response (292 words) compares and contrasts just in time and activity based costing methods and indicates when each method makes the most sense. The discussion is in everyday language and geared for beginning to intermediate.

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JIT and ABC really solve different production problems. JIT attempts to reduce the size of work-in-process (WIP) by only starting or adding materials and activity when it is needed, and not before. ABC, on the other hand, attempts to assign overhead to products and jobs based on the resources actually used rather than a summarize predetermined overhead rate (based on overall overhead budget and one cost ...

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