The Ace Hardware Company manufactures specialty brass door handles at its Calgary plant. Ace is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT?production:

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Ace?'s required rate of return on inventory investment is 10?% per year.

0 Estimated costs and benets - X a. Annual additional tooling costs would be $205,000. b. Average inventory would decline by 80% from the current level of $2,045,000. 0. Insurance, space, materials-handling, and setup costs, which currently total $610,000 annually, would decline by 25%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 30%. Ace currently incurs $420,000 in annual rework costs. e. Improved product quality under JIT production would enable Ace to raise the price of its product by $12 per unit. Ace sells 40,500 units each year. Print Done H Required X 1. Calculate the net benefit or cost to Ace if it adopts JIT production at the Calgary plant. 2. What nonfinancial and qualitative factors should Ace consider when making the decision to adopt JIT production? 3. Suppose Ace implements JIT production at its Calgary plant. Give examples of performance measures Ace could use to evaluate and control JIT production. What would be the benefit of Colonial implementing an enterprise resource planning (ERP) system? Print DoneAnnual Relevant Costs of Current Production System and JIT Production System foere Hardware Company Relevant Costs under Current Production Relevant Costs under JIT Relevant Items System Production System Annual tooling costs I Required return on investment: Average inventory per year I Insurance, space, materials handling, and setup costs Rework costs I Incremental revenues from higher selling prices I Total net incremental oosts =I Enter any number in the edit fields and then click Check