Quality cost categories Of the four quality costing categories, which quality cost is the most damaging to the organization? Explain. 7-30 JIT manufacturing and cost savings 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
Production cycle time
50 days
25 days
Inventories
$220,000
$40,000
Total sales
$1,000,000
$1,500,000
Costs as percent of sales:
Â
Direct materials
25%
20%
Direct labor
15%
Support
27%
17%
Inventory financing costs are 12% per year. Support costs are based on a time-driven activity-based costing analysis. Estimate the total financial benefits that resulted from the switch to JIT manufacturing operations.
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