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Boris Company introduced JIT manufacturing last year and has prepared the following data to assess...

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Question

Accounting

Boris Company introduced JIT manufacturing last year and has prepared the following data to assess the benefits from the change:

Category

Before the Change

After the Change

Inventories

$220,000

$40,000

Total sales

$1,000,000

$1,500,000

Costs as percent of sales:

Direct materials

25%

20%

Direct labor

20%

15%

Support

27%

17%

Inventory financing costs are 12% per year. By completing the chart below, calculate the total financial benefits that resulted from the switch to JIT manufacturing operations.

Before Change

After Change

Difference

Sales

Direct materials

Direct labor

Support costs

Inventory carrying costs

Total profit

Answer & Explanation Solved by verified expert
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