To facilitate a move toward JIT production, Alpha Company is considering a change in its plant layout. The plant controller, Angie Bently, has been asked to evaluate the costs and benefits of the change in plant layout. After meeting with production and marketing managers, Ann has compiled the following estimates:

1) Machine moving and reinstallation will cost $90,000.

2) Total sales will increase by 25% to $1500,000 because of a decrease in production cycle time required under the new plant layout. Average contribution margin is 25% of sales.

3) Inventory-related costs will decrease by 25%. Currently, the annual average carrying the value of inventory is $100,000. The annual inventory financing cost is 20%.

Complete the following analysis of the cost and benefits of the proposed change in plant layout (Consider only one years costs and benefits. Use parentheses or minus sign to show a net cost. Leave unused cells blank)

Relevant amount options to fill in the tables are

a) Decrease in contribution margin

b) Decrease in inventory costs

c) Machine moving and reinstallation costs

d) Increase in contribution margin

e) Increase in Inventory costs

Choose from any list or enter any number in the input fields. Select relevant options and leave rest blank to calculate net benefits/costs

Item Relevant amount

Benefits:

Costs:

Net benefits/(costs)