Exercise 11.14 (Algorithmic) IT Features and Product Costing Accuracy Prior to i
ID: 2526583 • Letter: E
Question
Exercise 11.14 (Algorithmic) IT Features and Product Costing Accuracy Prior to instaling 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 $6,007,680 per year. The maintenance hours used by each product and the quantity of each product produced are as follows: Maintenance Quantity Wheels 176,000 Pads Bearings 224,000 196,000 After stalling JIT three manufacturing cells ere created and oeil workers were trained to perform preventive maintenance and minor epairs. A full-? me maintenance person was also assigned to each Cell Maintenance cost however, these costs are fnow traceable to each cell as fol owS Cell, $1,659,780 154,000 17,000 154,000 or the three cells s Il totaled $6,007,680; Cell, 1,835,680 pads Cell 2,512,220 earings 1. Compute the pre-JIT maintenance cost per unit for each product. If required, round your answers to the nearest cent. Wheels Pads Bearings 2. Compute the maintenance cost per unit for each product after installing JIT. If required, round your answers to the nearest cent Wheels Pads Bearings per unit per unit per unit per unit per unit per unitExplanation / Answer
1.Compute the pre-JIT maintenance cost per unit for each product.
Maintenance cost per maintenance hour = $6007680 / 576000 = $10.43 per maintenance hour
Wheels = ($10.43x176000)/154000 = $11.92 per unit
Pads = ($10.43×176000)/154000 = $11.92 per unit
Bearings = ($10.43 ×196000)/196000= $11.92 per unit
2. Compute the maintenance cost per unit for each product after installing JIT.
Wheels = $1659780/154000 = $10.78 per unit
Pads = $1835680/154000 = $11.92 per unit
Bearings = $2512220/196000 = $12.82 per unit
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