Question
7. JIT Features and Product Costing Accuracy Prior to installing a JIT system, Barker Company, a producer of automobile parts, used maintenance hours to assign
7. JIT Features and Product Costing Accuracy
Prior to installing a JIT system, Barker Company, a producer of automobile parts, used maintenance hours to assign maintenance costs to its three products (wheels, brake pads, and ball bearings). The maintenance costs totaled $5,950,910 per year. The maintenance hours used by each product and the quantity of each product produced are as follows:
Maintenance Hours | Quantity Produced | |
Wheels | 163,000 | 142,625 |
Pads | 163,000 | 142,625 |
Bearings | 237,000 | 207,375 |
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 $5,950,910; however, these costs are now traceable to each cell as follows:
Cell, wheels | $1,563,310 |
Cell, pads | 1,722,910 |
Cell, bearings | 2,664,690 |
Required:
1. Compute the pre-JIT maintenance cost per unit for each product. If required, round your answers to the nearest cent.
Wheels | $ per unit |
Pads | $ per unit |
Bearings | $ per unit |
2. Compute the maintenance cost per unit for each product after installing JIT. If required, round your answers to the nearest cent.
Wheels | $ per unit |
Pads | $ per unit |
Bearings | $ per unit |
JIT Features and Product Costing Accuracy Prior to installing a JIT system, Barker Company, a producer of automobile parts, used maintenance hours to assign maintenance costs to its three products (wheels, brake pads, and ball bearings). The maintenance costs totaled $5,950,910 per year. The maintenance hours used by each product and the quantity of each product produced are as follows: Maintenance Hours Quantity Produced Wheels 163,000 142,625 Pads 163,000 142,625 Bearings 237,000 207,375 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 $5,950,910; however, these costs are now traceable to each cell as follows: Cell, wheels $1,563,310 Cell, pads 1,722,910 Cell, bearings 2,664,690 Required: 1. Compute the pre-JIT maintenance cost per unit for each product. If required, round your answers to the nearest cent. Wheels per unit Pads per unit Bearings per unit Required: 1. Compute the pre-JIT maintenance cost per unit for each product. If required, round your answers to the nearest cent. Wheels $ per unit Pads per unit Bearings per unit 2. Compute the maintenance cost per unit for each product after installing IT. If required, round your answers to the nearest cent. Wheels Pads $ per unit per unit per unit Bearings
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