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:

Question

Quizplus · Accepted Answer

Inventory financing cost is estimated as 15% per year.
Required:
1.Estimate the total financial benefits 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?
Please see Feedback for answers.
 Feedback: 1.Financial benefits from the switch to JIT operations are estimated to be $767,200 as shown below: 11ea6e70_bd5d_6b9d_8f54_7d595f066c03_TB1699_00 2.Among the expected benefits of a JIT implementation are the following:
a.increases in product quality (e.g. ,increases in % first-pass yield,or reduction in PPM defect rate)
b.decreases in production cycle time (e.g. ,68 days to 30 days)
c.reductions in waste/inefficiency
d.reduction in customer response time (CRT)
e.increases in cycle time efficiency
f.reduction in number of customer complaints
g.reduction in on-time delivery rates
3.Among the expected costs of implementing a JIT system are the following:
a.employee education/training costs (that is,educating employees regarding the theory and objective of JIT,as well as training needed to carry out activities at the highest level of quality)
b.information-collection/dissemination regarding the benefits and costs of JIT (all of this done through changes made to the management accounting system)
c.possible need to revise the company's incentive compensation scheme.

In an Effort to Improve Its Competitive Position,J