In an effort to improve its competitive position, Oregon Co. recently introduced a new inventory control system. Its management accountant assembled the following data regarding the recent change: Item Before new system After new system Production cycle time 50 days $400,000 $1,800,000 40 days Inventory level $300,000 Total sales $2,000,000 Estimated cost data, % of sales Direct materials 35% 30% Direct labor 20% 15% Variable overhead 15% 10% Fixed overhead 10% 5% The company's inventory financing cost is estimated as 10% per year. Required: 1. Estimate the net financial benefit (expressed in terms of operating income) that the company realized from the switch to a new inventory control system. 2. List four (4) non-financial benefits the company might expect as a result to its move to new inventory control system.

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