Prior to Installing a JIT System, Reilly Company Used Machine

question 78

Multiple Choice

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:
$\begin{array}{lcc} &\underline{\text {Machine Hours}}& \underline{\text {Quantity Produced}}\\4 \mathrm{~cm} & 6,000 & 15,000 \mathrm{rolls} \\6 \mathrm{~cm} & 10,000 & 12,500 \mathrm{rolls} \\9 \mathrm{~cm} & 8,000 & 11.200 \mathrm{rolls}\end{array}$ 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.
$$\begin{array} { c r } \text { Cell } 4 \mathrm {~cm} & \$ 110,000 \\\text { Cell, } 6 \mathrm {~cm} & 150,000 \\\text { Cell } 9 \mathrm {~cm} & 160,000\end{array}$$
-Refer to the figure.What would be the maintenance cost per roll of 9-cm insulation before JIT is installed?

• A)$8.75
• B)$12.50
• C)$17.50
• D)$37.50

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