MooCorp sells farm equipment Moo centers that repair MooCorp's equip implemented a just-in-time inventory program Division controller, decides to evalua Tinancial performance. Betsy documents the following results. um equipment. MooCorp's Service Division provides spare parts to vanous repan "MooCorp's equipment. In an effort to reduce inventory costs, the Service Division e inventory program on January 1, 2018. A year later. Betsy Cow, the Service ler, decides to evaluate the effect the program has had on the Service Division's le Service Division's average inventory declined from $550.000 to $150,000. Projected annual insurance costs of $80.000 declined 60% owing to the lower average inventory leased 8,000-square-foot warehouse, previously used for materials storage, was not used at all during the year. The division paid $11,200 annual rent for the warehouse and was able to sublet 75% of the building to several tenants at $2.50 per square foot. The balance of the space remained idle. I wo warehouse employees whose services were no longer needed were transferred on January 1, 2018 to the purchasing department to assist in the coordination of the just-in-time program. The annual salary costs for these two employees totaled $38,000 and continued to be charged to the indirect manufacturing labour portion of fixed manufacturing costs. Despite the use of overtime to manufacture 7,500 spare parts, lost sales due to stock outs totaled 3,800 spare parts. The overtime premium incurred amounted to $5.60 per part manufactured. The use of overtime to fill spare parts orders was immaterial prior to January 1. Before the decision to implement the just-in-time inventory program, MooCorp's Service Division had completed its 2018 budget. The division's budgeted income statement, without any adjustments for just-in-time inventory, is presented below. MooCorp's required rate of return is 15% per year. MooCorp Service Division Budgeted Income Statement for the Year Ended December 31, 2018 (in thousands) $ 6,160 2,660 1,120 2,09 3,780 2,380 Revenues (280,000 spare parts)......... Cost of goods sold Variable manufacturing costs... Fixed manufacturing costs... Gross margin.................. Marketing and distribution costs Variable marketing and distribution costs..... Fixed marketing and distribution costs. Operating income. 700 555 1,255 1,125 $ REQUIRED: 1. Calculate the cash savings (loss) of MooCorp's Service Division for 2018 that resulted from the adoption of the just-in-time inventory program. 2 Identify and explain the factors, other than financial, that should be considered before a company implements a just-in-time program. MooCorp sells farm equipment Moo centers that repair MooCorp's equip implemented a just-in-time inventory program Division controller, decides to evalua Tinancial performance. Betsy documents the following results. um equipment. MooCorp's Service Division provides spare parts to vanous repan "MooCorp's equipment. In an effort to reduce inventory costs, the Service Division e inventory program on January 1, 2018. A year later. Betsy Cow, the Service ler, decides to evaluate the effect the program has had on the Service Division's le Service Division's average inventory declined from $550.000 to $150,000. Projected annual insurance costs of $80.000 declined 60% owing to the lower average inventory leased 8,000-square-foot warehouse, previously used for materials storage, was not used at all during the year. The division paid $11,200 annual rent for the warehouse and was able to sublet 75% of the building to several tenants at $2.50 per square foot. The balance of the space remained idle. I wo warehouse employees whose services were no longer needed were transferred on January 1, 2018 to the purchasing department to assist in the coordination of the just-in-time program. The annual salary costs for these two employees totaled $38,000 and continued to be charged to the indirect manufacturing labour portion of fixed manufacturing costs. Despite the use of overtime to manufacture 7,500 spare parts, lost sales due to stock outs totaled 3,800 spare parts. The overtime premium incurred amounted to $5.60 per part manufactured. The use of overtime to fill spare parts orders was immaterial prior to January 1. Before the decision to implement the just-in-time inventory program, MooCorp's Service Division had completed its 2018 budget. The division's budgeted income statement, without any adjustments for just-in-time inventory, is presented below. MooCorp's required rate of return is 15% per year. MooCorp Service Division Budgeted Income Statement for the Year Ended December 31, 2018 (in thousands) $ 6,160 2,660 1,120 2,09 3,780 2,380 Revenues (280,000 spare parts)......... Cost of goods sold Variable manufacturing costs... Fixed manufacturing costs... Gross margin.................. Marketing and distribution costs Variable marketing and distribution costs..... Fixed marketing and distribution costs. Operating income. 700 555 1,255 1,125 $ REQUIRED: 1. Calculate the cash savings (loss) of MooCorp's Service Division for 2018 that resulted from the adoption of the just-in-time inventory program. 2 Identify and explain the factors, other than financial, that should be considered before a company implements a just-in-time program