Multiple Choice
The manager at Shell Manufacturing needs to incur $90,000 in annual production costs to reduce setup times at the plant in Virginia.The manager expects JIT to reduce average inventory by $475,000 each year and relevant costs of insurance,storage,materials handling,and setup by $32,000 each year.The required rate of return on inventory investments is 10% per year.The manager reports the cost to rework 500 units each is $34,and the cost to reduce warranty repair costs on 210 units is $72 per unit.
Required
Compute the net incremental benefit to consider benefits of lower inventories and annual relevant benefits and costs from implementing JIT.Should the manager implement the change?
A) $11,620;no
B) $21,620;yes
C) $31,620;no
D) $41,620;yes
E) $51,620;no
Correct Answer:
Verified
Correct Answer:
Verified
Q98: _ are costs incurred to detect which
Q99: Tall Trees Incorporated is a distributor of
Q100: The square root in the EOQ model
Q101: What are costs of qualities (COQ)?
Q102: The demand-pull feature of JIT production systems
Q104: _ is a "demand pull" manufacturing system
Q105: The managerial accountant at the Candle Factory
Q106: Companies that implement JIT purchasing choose their
Q107: In which step of the five-step decision-making
Q108: Most companies that implement JIT production do