Describe the cost accumulation process in a traditional manufacturing environment versus a just-in-time (JIT) environment

In a traditional manufacturing environment, when raw materials are received, their cost is recorded in the raw materials account until they are needed for production. When raw materials are needed for production, their costs are moved from the raw materials account to the work in process account to be added to direct labor and overhead costs. Once production is complete, all product costs related to the completed units are transferred from work in process to the finished goods account until the units are sold. When sold, associated costs are transferred to cost of goods sold. In a just-in-time environment, very little, if any, inventories are maintained. As raw materials, direct labor, and overhead costs are incurred for a specific job, the costs are often put directly into the cost of goods sold account. The cost accumulation process in a just-in-time environment is called backflush costing.