In an Effort to Improve Its Competitive Position, J

question 62

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:

Shutout

In finance, it typically means being prevented from participating in an opportunity, often due to timing or fulfillment conditions not being met.

Monthly Base Salary

The fixed amount of money paid to an employee every month, excluding bonuses, benefits, or overtime.

Commission Rate

The percentage or fixed payment associated with a transaction, often used in sales to determine the amount paid to the salesperson or agent.

Gross Earnings

The total amount of money an individual or company makes before any deductions are made.