Because of the Need to Improve Its Competitive Standing, the XYZ

question 69

Essay

Because of the need to improve its competitive standing, the XYZ Company has embraced a JIT production philosophy. To facilitate the transition to JIT, the company is contemplating a change in its production layout. You, as the management accountant for the company, have recently been asked to prepare an analysis of relevant costs and benefits associated with the proposed change in plant layout. After consulting with relevant managers within the company, you have come up with the following pieces of information:
(a) Estimated cost to move/reinstall existing machinery and equipment = $100,000.
(b) Estimated increase in sales = 20% (to $1,200,000). (This increase is based on an assumed decrease in production cycle time under the new plan layout. Experience shows an average contribution margin of 31% of sales revenue.)
(c) Inventory-related costs are predicted to decrease by 25%. Currently, the company holds an average inventory of approximately $200,000. You estimate that inventory-holding costs amount to 15% (on an annual basis).

Understand the role of non-monetary rewards in labor supply decisions and job satisfaction.

Understand the impact of international trade on the demand for skilled versus unskilled labor.

Comprehend the concept of human capital and how it affects earnings.

Articulate the reasons for wage differences among different job types and industries.

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Definitions:

GDP

Gross Domestic Product is a calculation that reflects the economic success of a nation by summing the value of all produced goods and services within a certain time frame.

Consumption

The use of goods and services by households, contributing to the overall demand in an economy.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, often through the acquisition of assets.

Government Spending

Expenditures made by the government for its operations, provision of public services, or to stimulate the economy.