Question
Boris Company introduced JIT manufacturing last year and has prepared the following data to assess the benefits from the change: Category Before the Change After
Boris Company introduced JIT manufacturing last year and has prepared the following data to assess the benefits from the change:
| Category | Before the Change | After the Change |
| Inventories | $220,000 | $40,000 |
| Total sales | $1,000,000 | $1,500,000 |
| Costs as percent of sales: |
|
|
| Direct materials | 25% | 20% |
| Direct labor | 20% | 15% |
| Support | 27% | 17% |
Inventory financing costs are 12% per year. By completing the chart below, calculate the total financial benefits that resulted from the switch to JIT manufacturing operations.
|
| Before Change | After Change | Difference |
| Sales |
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| Direct materials |
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| Direct labor |
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| Support costs |
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| Inventory carrying costs |
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| Total profit |
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Financial Accounting Reporting Analysis And Decision Making
Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong
5th Edition
0730313743, 978-0730313748
