18) The managerial accountant at Midlothian Manufacturing recently implemented JIT and she wants to compare the financial performance measure before she implemented JIT. The inventory turnover ratio prior to implementing JIT was 2.5. After JIT, cost of goods sold was $500,000,000 and the average inventory was $1,900,000. What was the inventory turnover ratio at Midlothian Manufacturing?
Midlothian Manufacturing
Cost of goods sold$500,000,000
Average inventory$1,900,000
Required:
Compute the inventory ratio turnover at Midlothian Manufacturing. Was the decision to implement JIT effective?
A) 1.4; decrease
B) 2.5; no change
C) 3.1; increase
D) 3.9; increase
E) 4.96; increase
19) The managerial accountant at Delaware Deluxe Manufacturing reported the following:
Delaware Deluxe Manufacturing
Before JITAfter JIT
Inventory turnover ratio3.58.1
Units produced per hour1,0001,500
Number of units scrapped or needing rework20050
Manufacturing time3 hours1 hour
Required
Was the decision to implement JIT effective? Why or why
not?