Prior to Installing a JIT System, Reilly Company Used Machine

question 8

Multiple Choice

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

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

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