Prior to installing a JIT system. Burrows Company used machine hours to assign mainte¬

nance costs to its three products (socket sets, pliers, and wrenches). The maintenance costs totaled $560,000 per year. The machine hours used by each product and the quantity of each product produced are as follows:

After installing JIT, three manufacturing cells were created, and cell workers were trained to perform preventive maintenance and minor repairs. A full-time maintenance person was also assigned to each cell. Maintenance costs for the three cells still totaled $560,000; how¬
ever, these costs are now traceable to each cell as follows:

Required:
1. Compute the pre-JIT maintenance cost per product for each type.
2. Compute maintenance cost per unit for each product after installing JIT.
3. Explain why the JIT maintenance cost per unit is more accurate than the pre-JIT cost.

Transcribed Image Text:

Machine Hours Quantity Produced Socket sets 60,000 15,000 Pliers 60,000 15,000 Wrenches 80,000 20,000