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