Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6-inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Quantity Produced 6-inch 12,000 31,250 rolls 8-inch 20,000 25,000 rolls 11-inch 18,000 12,000 rolls 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 $400,000; however, these costs are now traceable to each cell. Cell, 6-inch $100,000 Cell, 8-inch 120,000 Cell, 11-inch 180,000 After installing JIT, the maintenance cost per roll of 6-inch insulation would be
Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6-inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Quantity Produced 6-inch 12,000 31,250 rolls 8-inch 20,000 25,000 rolls 11-inch 18,000 12,000 rolls 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 $400,000; however, these costs are now traceable to each cell. Cell, 6-inch $100,000 Cell, 8-inch 120,000 Cell, 11-inch 180,000 After installing JIT, the maintenance cost per roll of 6-inch insulation would be
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prior to installing a JIT system, Clarendon Company used machine hours to assign maintenance costs to its three products of 6-inch, 8-inch, and 11-inch insulation. The maintenance costs totaled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
| Machine Hours | Quantity Produced | |||
| 6-inch | 12,000 | 31,250 rolls | ||
| 8-inch | 20,000 | 25,000 rolls | ||
| 11-inch | 18,000 | 12,000 rolls |
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 $400,000; however, these costs are now traceable to each cell.
| Cell, 6-inch | $100,000 |
| Cell, 8-inch | 120,000 |
| Cell, 11-inch | 180,000 |
After installing JIT, the maintenance cost per roll of 6-inch insulation would be
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