Prior to installing a JIT system, Reilly Company used machine hours to assign maintenance costs to its three products of 4-cm, 6-cm, and 9-cm insulation. The maintenance costs totalled $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 totalled $420,000; however,these costs are now traceable to each cell.
-Refer to the figure.What is the maintenance cost per roll of 6-cm insulation after installing JIT?
A) $6.67
B) $10.85
C) $12.00
D) $15.00
Correct Answer:
Verified
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