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5 As part of its commitment to quality, the J. J. Borden manufacturing company is proposing to introduce just-in-time (JIT) production methods. Managers of the
5 As part of its commitment to quality, the J. J. Borden manufacturing company is proposing to introduce just-in-time (JIT) production methods. Managers of the company have an intultive feel regarding the financial benefits assoclated with a change to JIT, but they would like to have some data to inform their decision making in this regard. You are provided with the following data 0.41 points Existing Situation After Adopting JIT Item Manufacturing costs as percentage of sales: Product-level support Variable manufacturing overhead Direct materials Direct manufacturing labor 123 2B 30 21 10 20 eBook Other financial data: Sales revenue Inventory of WI? $1,415,000 245,000 $1,780,000 43,000 Re erences Other data: Manufacturing cycle time Inventory tinancing costs (per annum) 60 days 102 30 days 102 Required As the management accountant for the company, prepare an estimate the financlal benefits assoclated with the adoption of JIT. Specifically, what is the estimated change in annual operating income attributable to the JIT implementation? After JIT Change Situation Less: Costs Operating profit
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