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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

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 $5,872,650 per year. The maintenance hours used by each product and the quantity of each product produced are as follows:

Maintenance Hours Quantity Produced
Wheels 177,000 154,875
Pads 177,000 154,875
Bearings 241,000 210,875

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 $5,872,650; however, these costs are now traceable to each cell as follows:

Cell, wheels $1,570,090
Cell, pads 1,746,990
Cell, bearings 2,555,570

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

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