Modul ke: Akuntansi Biaya. Just In Time and Backflushing. Fakultas Ekonomi dan Bisnis. Program Studi S1 Manajemen

Transcription

1 Modul ke: 07 Suryadharma Fakultas Ekonomi dan Bisnis Akuntansi Biaya Just In Time and Backflushing Sim, SE, M. Ak Program Studi S1 Manajemen

2 Just In Time Traditionally manufacturers have forecasted demand for their products into the future and then have attempted to smooth out production to meet that forecasted demand. At the same time, they have also attempted to keep everyone as busy as possible producing output so as to maximize "efficiency" and (hopefully) reduce costs. Unfortunately, this approach has a number of major drawbacks including large inventories, long production times, high defect rates, production obsolescence, inability to meet delivery schedules, and (ironically) high costs. None of this is obvious-if it were, companies would long ago have abandoned this approach. Managers at Toyota are credited with the insight that an entirely new approach, called just in time (JIT) was needed.

3 Definition and Explanation of Just in Time Manufacturing Just In Time (JIT) is a production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand. When Companies use Just in Time (JIT) manufacturing and inventory control system, they purchase materials and produce units only as needed to meet actual customers demand. In just in time manufacturing system inventories are reduced to the minimum and in some cases are zero. JIT approach can be used in both manufacturing and merchandising companies. It has the most profound effects, however, on the operations of manufacturing companies which maintain three class of inventories-raw material, Work in process, and finished goods. Traditionally, manufacturing companies have maintained large amounts of all three types of inventories to act as buffers so that operations can proceed smoothly even if there are unanticipated disruptions. Raw materials inventories provide insurance in case suppliers are late with deliveries. Work in process inventories are maintained in case a work station is unable to operate due to a breakdown or other reason. Finished goods inventories are maintained to accommodate unanticipated fluctuations in demand. While these inventories provide buffers against unforeseen events, they have a cost. In addition to the money tied up in the inventories, expert argue that the presence of inventories encourages inefficient and sloppy work, results in too many defects, and dramatically increase the amount of time required to complete a product.

4 Just-In-Time Concept Under ideal conditions a company operating at JIT manufacturing system would purchase only enough materials each day to meet that days needs. Moreover, the company would have no goods still in process at the end of the day, and all goods completed during the day would have been shipped immediately to customers. As this sequence suggests, "just-in-time" means that raw materials are received just in time to go into production, manufacturing parts are completed just in time to be assembled into products, and products are completed just in time to be shipped to customers.

5

6 Benefits / Advantages of Just in Time Manufacturing System The main benefits of just in time manufacturing system are the following: 1. Funds that were tied up in inventories can be used elsewhere. 2. Areas previously used, to store inventories can be used for other more productive uses. 3. Throughput time is reduced, resulting in greater potential output and quicker response to customers. 4. Defect rates are reduced, resulting in less waste and greater customer satisfaction.

7 Disadvantages of Just in Time Manufacturing System: Implementing thorough JIT procedures can involve a major overhaul of your business systems - it may be difficult and expensive to introduce. JIT manufacturing also opens businesses to a number of risks, notably those associated with your supply chain. With no stocks to fall back on, a minor disruption in supplies to your business from just one supplier could force production to cease at very short notice.

8 Backflush Costing Back-flush costing describes a costing system that delays recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods. Where journal entries for one or more stages in the cycle are omitted, the journal entries for a subsequent stage use normal or standard costs to work backward to flush out the costs in the cycle for which journal entries were not made.

9 The strategy here is that involves delaying the costing process until the production of goods or services is completed. Once the production cycle is finished, the costs are then applied to the operation, making it possible to determine the costs associated with manufacturing the products and to set the sale price accordingly. One of the benefits of this strategy is that there is no need to closely track costs as they occur, thus simplifying the accounting process while the production process is in progress. While this approach is relatively easy, the lack of detail can sometimes create issues at a later date.

10 The concept of back-flush costing is often associated with a just-in-time or JIT operation. With this approach, one of the goals is to keep the inventory of raw materials as low as possible. Thus, orders for raw materials are scheduled so that the goods arrive just before the production commences. By the time the invoicing for the materials is received, the goods are produced, costs are calculated, and the products are sold at a rate that covers the expenses. This minimizes transactions at that point, thus keeping the ledgers balanced and factual, but without the need to make multiple postings all through the production process.

11 Backflush costing methods: Who should use them Backflush costing makes the most sense for private companies with just-in-time inventory systems or those that use activity-based costing. As mentioned above, backflush costing is not consistent with GAAP and cannot be used by public companies that are subjected to strict reporting requirements. Companies that must be audited, either internally or by independent third-party auditors, may not be able to use backflush costing because it does not leave much of an audit trail. It is not possible to report an accurate inventory value at most points in the production process. If the inventory cycle is long, backflush costing will greatly undervalue the inventory during most of the year. When the products are finally sold, the backflush of costs can make a product that seemed profitable into a money loser for the company.

12 Terima Kasih Suryadharma Sim, SE, M. Ak