As part of its commitment to quality, the J. J. Borden manufacturing company is proposing to introduce just-in-time (JIT) production methods. Managers of the company have an intuitive feel regarding the financial benefits associated with a change to JIT, but they would like to have some data to inform their decision making in this regard. You are provided with the following data:

Required

You have been asked, in conjunction with your position as the management accountant for the company, to construct an Excel spreadsheet that can be used to estimate the financial benefits associated with the adoption ofJIT.

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Existing Situation After Adopting JIT Item Manufacturing Costs as Percentage of Sales: Product-level support costs 12% 5% Variable manufacturing overhead 28% 10% 30% 20% Direct materials Direct manufacturing labor 15% 22% Other Financial Data: Sales revenue $1,350,000 $1,650,000 Inventory of WIP $180,000 $30,000 Other Data: Manufacturing cycle time 30 days 60 days Inventory financing cost (per annum) 10% 10%