Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Just-in-Time Inventory The Field Manufacturing Company uses the perpetual inventory system for its raw material inventory. During 2012, Field plans to include raw material costing

Just-in-Time Inventory The Field Manufacturing Company uses the perpetual inventory system for its raw material inventory. During 2012, Field plans to include raw material costing $2,400,000 in the products that it manufactures. Henry Field, president of the company, wants to adopt the just-in-time manufacturing philosophy for the raw materials inventory during 2012. He wants to have only the raw material needed for the next day's production at the end of each day. The factory operates 300 days each year. Historically, the raw materials inventory balance at the end of the day has averaged $60,000 cost. Field has an annual inventory carrying cost equal to 22% of total inventory cost. Round to the nearest dollar.

Required

  1. What is the anticipated inventory carrying cost (in dollars) if Field does not adopt the just-in-time manufacturing philosophy?
  2. Calculate the average level (in dollars) for the raw materials inventory if Field adopts the just-in-time manufacturing philosophy.
  3. Calculate the reductions in the raw materials inventory level and the raw materials inventory annual carrying cost if Field adopts the just-in-time manufacturing philosophy.

image text in transcribed

Just-in-time Inventory a. $ b. $ per day c. Reduction in materials inventory carrying cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Bookkeeping And Financial Accounting

Authors: Emile Woolf International

1st Edition

1848437552, 978-1848437555

More Books

Students also viewed these Accounting questions

Question

=+What would you do? Explain.

Answered: 1 week ago

Question

Define checking the box.

Answered: 1 week ago

Question

8. Demonstrate aspects of assessing group performance

Answered: 1 week ago