Prior to installing a JIT system, Reilly Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 9-inch insulation.The maintenance costs totaled $420,000 per year.The machine hours used by each product and the quantity produced of each product are as follows: After installing JIT, three manufacturing cells were created and the cell workers were trained to perform maintenance.Maintenance costs for the three cells still totaled $420,000; however, these costs are now traceable to each cell.
The maintenance cost per roll of 4-inch insulation before JIT is installed would be

Question

Prior to installing a JIT system, Reilly Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 9-inch insulation.The maintenance costs totaled $420,000 per year.The machine hours used by each product and the quantity produced of each product are as follows:  After installing JIT, three manufacturing cells were created and the cell workers were trained to perform maintenance.Maintenance costs for the three cells still totaled $420,000; however, these costs are now traceable to each cell.
 The maintenance cost per roll of 4-inch insulation before JIT is installed would be

Quizplus · Accepted Answer

Before installing JIT, maintenance costs were assigned based on machine hours. Therefore, we need to find the machine hours used by each product:

4-inch insulation: 24,000 machine hours
6-inch insulation: 36,000 machine hours
9-inch insulation: 40,000 machine hours

To find the maintenance cost per roll of 4-inch insulation, we need to divide the total maintenance cost by the total number of rolls of 4-inch insulation produced:

Total rolls of 4-inch insulation = 24,000 / 0.25 = 96,000 rolls

Maintenance cost per roll of 4-inch insulation = $420,000 / 96,000 rolls of 4-inch insulation
= $4.38 per roll

Therefore, the maintenance cost per roll of 4-inch insulation before installing JIT was $4.38. However, since this question is asking for the maintenance cost per roll of 4-inch insulation before JIT is installed, the correct answer is not provided as an option.

Prior to Installing a JIT System, Reilly Company Used Machine