The Highgate Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Highgate's inventory of raw steel averages $350,000. The steel supplier is willing to supply see in smaller lots at no additional charge (Click the icon to view additional information) Click the icon to view Highgate's budget income statement for the year ending December 31, 2017) Calculate the estimated dollar savings (loss) for the Highgate Corporation that would result in 2017 from the adoption of IT purchasing Begin by calculating the relevant costs under the current purchasing policy. Then determine the relevant costs under the JIT purchasing policy. Finally, determine the estimated dollar savings (loss) if Highgate Corporation adopts JIT purchasing (Do not round intermediary calculations. Only round your final answers to the nearest whole number. Enter a zero 50 in the cell if no relevant costs apply. Enter relevant savings as a negative number.) Relevant Costs under Current Required return on investment Annual insurance and property tax costs Warehouse rent Overtime costs No overtime Overtime premium Stockout costs No stockouts Stockouts Total incremental costs Purchasing Policy - X relevant cost (Do not round estment property tax co More info Ruth Johnson, Highgate's controller, identifies the following effects of adopting a JIT inventory program to virtually eliminate steel inventory: Without scheduling any overtime, lost sales due to stockouts would increase by 27,000 units per year. However, by incurring overtime premiums of $14,000 per year, the increase in lost sales could be reduced to 12,000 units per year. This would be the maximum amount of overtime that would be feasible for Highgate. Two warehouses currently used for steel bar storage would no longer be needed. Highgate rents one warehouse from another company under a cancelable leasing arrangement at an annual cost of $36,000. The other warehouse is owned by Highgate and contains 14,000 square feet. Three-fourths of the space in the owned warehouse could be rented for $0.50 per square foot per year. Insurance and property tax costs totaling $7,500 per year would be eliminated. Finally, d h the cell it Print Done al information.) ce's Data table ng Highgate's required rate of return on investment is 20% per year. Highgate's budgeted income statement for the year ending December 31, 2017, (in thousands) is: Cost und Revenues (880,000 units) Cost of goods sold Variable costs Fixed costs Total costs of goods sold x co Gross margin Marketing and distribution costs Variable costs Fixed costs SA Total marketing and distribution costs Operating income - X F h th 4,400 2,200 650 2,850 1,550 $ 440 850 1,290 $ 260 Print Done