Question
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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