please answer question 7-33
$400 per unit. Annual inventory carrying costs, not included in these are estimated to be 10%. SMY's average inventory levels are estimated as follows: 2 months of production Direct material Work in process (100% complete for materials 2 months of production and 50% for conversion) 1 month of production Finished goods Compute the annual inventory carrying costs for SMY Corporation. 7-32 ABC and TOC Discuss the similarities and differences between activity- based costing and the theory of constraints, as well as situations in which one approach might be preferable to the other. 7-33 Relevant cost and revenues: changes in facilities layout To facilitate a move toward JIT production, AB Company is considering a change in its plant layout. The plant controller, Anita Bentley, has been asked to evaluate the costs and benefits of the change in plant layout. After meeting with production and marketing managers, Anita has compiled the following estimates: . Machine moving and reinstallation will cost $100,000. . Total sales will increase by 20% to $1,200,000 because of a decrease in production cycle time required under the new plant layout. Average contribution margin is 31% of sales. . Inventory-related costs will decrease by 25%. Currently, the annual average carrying value of inventory is $200,000. The annual inventory financing cost is 15%. Should AB implement the proposed change in plant layout? Support your answer. 7-34 Cycle time efficiency and JIT Walker Brothers Company is considering the installation of a JIT manufacturing system in the hope that it will improve the company's overall processing cycle efficiency. Data from the traditional system and estimates for the JIT system are presented here for their Nosun product: TIME CATEGORY TRADITIONAL SYSTEM JIT SYSTEM Storage 4 hours Inspection 1 hour 40 minutes Moving 80 minutes 5 minutes Processing 2 hours 20 minutes 75 minutes