JIT Inventory Management for Grant Company
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Grant Company began the year with $870,000 of raw materials inventory, $1,390,000 of work-in-progress inventory, and $620,000 of finished goods inventory. During the year, the company purchased $3,550,000 of raw material and used $3,720,000 of raw materials in production. Labor used in production for the year was $2,490,000. Overhead was $1,380,000. Work-in-progress completed and transferred to finished goods inventory was $7,410,000. Cost of goods sold for the year was $7,500,000.
a. Determine the ending balance in the raw materials, work in progress and finished goods inventory accounts.
b. Assume Grant practices JIT inventory management. Its goal is to reduce inventory levels, improve quality, and reduce costs. Comment on Grant's success in reducing inventory levels.
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The solution examines JIT inventory management for Grant Company.
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