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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 $6,967,240 per year. The maintenance hours used by each product and the quantity of each product produced are as follows:

Maintenance Hours Quantity Produced
Wheels 170,000 148,750
Pads 170,000 148,750
Bearings 256,000 224,000

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 $6,967,240; however, these costs are now traceable to each cell as follows:

Cell, wheels $1,810,900
Cell, pads 1,987,300
Cell, bearings 3,169,040

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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