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 9-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 9-inch insulation before JIT is installed would be

Quizplus · Accepted Answer

Before implementing JIT, maintenance costs were assigned by machine hours.

Total machine hours: 
(4-inch insulation × 5 hours) + (6-inch insulation × 6 hours) + (9-inch insulation × 9 hours) = 116,000 machine hours

Total maintenance cost: $420,000

Maintenance cost per machine hour: $420,000 ÷ 116,000 machine hours = $3.62 per machine hour

To find the maintenance cost per roll of 9-inch insulation:

Maintenance cost per roll of 9-inch insulation = (9 hours per roll × $3.62 per machine hour) = $32.58

Therefore, before implementing JIT, the maintenance cost per roll of 9-inch insulation was $32.58.

Since none of the answer choices match this calculation, we need to recalculate the maintenance cost per machine hour after JIT is implemented and then use that to find the maintenance cost per roll of 9-inch insulation.

Prior to Installing a JIT System, Reilly Company Used Machine