Prior to Installing a JIT System, Clarendon Company Used Machine

question 17

Multiple Choice

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: 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.
After installing JIT, the maintenance cost per roll of 11-inch insulation would be

• A) $12.50.
• B) $12.86.
• C) $15.00.
• D) $5.86.

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Definitions:

High Costs

Refers to significant expenses incurred in the production, operation, or maintenance of something, influencing pricing and profitability.

Time Limits

Predetermined periods set to complete specific tasks or objectives, often used to manage productivity and deadlines effectively.

Distributive Fairness

Pertains to a customer’s perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure.

Compensation

The payment or benefits received by employees in exchange for their work or services, which can include salary, wages, benefits, and bonuses.