In an Effort to Improve Its Competitive Position, J

question 130

Essay

In an effort to improve its competitive position, J. J. Borden Company recently introduced Just-in-Time (JIT) production techniques. Its management accountant assembled the following data regarding the recent change:
Inventory financing cost is estimated as 15% per year.
Required:
1. Estimate the net financial benefit (expressed in terms of operating income) that the company realized from the switch to JIT manufacturing.
2. List four (4) nonfinancial benefits the company might expect as a result to its move to JIT.
3. What are the primary expected costs of implementing a JIT system?

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Definitions:

Average Attendance

The mean number of individuals present at a series of events or within a given period.

Negative Residual

The difference between an observed value and the predicted value in a regression analysis, specifically when the observed value is less than the predicted value.

Electricity Usage

The amount of electric energy consumed by a device, home, or organization over a specific period.

Square Feet

A unit of area measurement in the Imperial and US customary systems, equal to the area of a square with sides one foot long.