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:

Item Existing Situation After Adopting JIT

Manufacturing costs as percentage of sales:

Product$-$level support $13\%6\%$

Variable manufacturing overhead $2813$

Direct materials $3020$

Direct manufacturing labor $2114$

Other Financial Data:

Sales revenue $ $1,395,000$ $ $1,740,000$

Inventory of WIP $225,00039,000$

Other Data:

Manufacturing cycle time $60$ days $30$ days

Inventory financing costs $($per annum$)10\%10\%$

Required:

As the management accountant for the company, prepare an estimate the financial benefits associated with the adoption of JIT. Specifically, what is the estimated change in annual operating income attributable to the JIT implementation?Exercise $17-51($Algo$)$ Relevant Cost Analysis$-$Conversion to JIT; Spreadsheet Application $[$LO $17-1,17-5]$

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:

As the management accountant for the company, prepare an estimate the financial benefits associated with the adoption of JIT.

Specifically, what is the estimated change in annual operating income attributable to the JIT implementation?