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in a JIT environment then we should be attempting to eliminate inventories. Use of a limited resource in production of inventories should be avoided and therefore any work-in-progress should be valued at only the material cost can you explain this sir?
Ideally, with JIT there is no inventory of materials being held.
You should remember from Paper MA that WIP would be valued at the material cost plus the cost of any labour and overheads used in part-finishing the WIP. However if we are not keeping inventories then all that matters is the cost of the materials involved.
More specifically how would valuing wip in material cost only promote the efficient use of resources?
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