Question

JIT Features and Product Costing Accuracy Prior to installing a IT 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 65,000,000 per year. The maintenance hours used by each product and the quantity of each product produced are as follows: Maintenance Hours 180,000 Wheels Quantity Produced 157.500 157,500 Pads 180,000 Bearings 240,000 210,000 After installing IT, 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 $5,000,000; however, these costs are now traceable to each cell as follows: $1,596,000 Cell, wheels Cell, pads Cell, bearings 1,764,000 2,520,000 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 per unit Bearings

Answer 1

It feature and product (17 pre-JIT maintenance cost per unit - wheels Pads Bearings $ 3 11.2 11.2 11.2 Pes unit pes unit Pes Unit Explanahon (17 maintenance cost pes maintenance Hour: - TOTCH cost = Total Hour = $58,80,000 = 600000 HOUS C 180000 + 180000 7240000) = $9.8 per Hous 17 wheels ($9.8 X 23 pads ($9.8 x 3) Beasing: 569.8 X 180,000 : 180,000 & 1,49000 = 157500] = $11.2 157500J = $11.2 210,000 ] - 11.2 (2] After Installing JIT wheels pads Bearings $10.13 $ 11-2 & 12 S$ 15,96000 = 15750o) ($17, 64000 - is 7500 (1 25,20,000 - 210,0007 - Peronit cost: TOTCH cost allocated - Torcy Hour allocated