80.2K

Verified Solution

Link Copied!

In 1952 Blayney Scott and his wife Almeda started a small company in Victoria, British Columbia, Canada that pioneered the use of plastics in the manufacturing of marine products. Scotty Manufacturing has evolved to produce thousands of products under the Scotty Trademark which are sold into the fishing, marine, outdoor and firefighting industries worldwide. To manage production costs, Scotty is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: Annual additional tooling costs would be 5600.000 Annual inventory would decline by 50 percent from the current level of $4,000,000 Insurance, material handling, and set-up costs which currently total $1,000,000 annually, would decline by 25% Rework would be reduced by 30 percent. Scotty currently incurs $800,000 in annual rework costs. Improved product quality under JIT production would enable Scotty to raise the price of its products by S6 per unit. Scotty sells 100,000 units per year. Scotty's required rate of return is 10 percent per year. Required: Submit your written answers from the multi-choice question here for Scotty Manufacturing. The correctly written multi-choice response is worth 7 marks. . . To manage production costs, Scotty Manufacturing is considering implementing a JIT production system. Required: What are the total net relevant costs (including any revenues) under the proposed JIT production system? (8 marks - 1 mark for correct multi-choice answer and 7 other marks for showing correct work in the workspace question provided -pick correct multi-choice answer below and then add any work to Scotty Manufacturing's answer workspace question). $1,470,000 $2,110,000 None of the other answers $870,000 $2,360,000 $1,220,000

Answer & Explanation Solved by verified expert

See Answer