Prior to Installing a JIT System, Clarendon Company Used Machine

question 19

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.
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

• A) $1.28.
• B) $3.20.
• C) $2.84.
• D) $2.56.

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Definitions:

Late

The state of occurring after the expected, usual, or proper time.

Pygmalion Effect

The phenomenon whereby higher expectations lead to an increase in performance; a form of self-fulfilling prophecy.

Expectations

Beliefs about the way events or actions will unfold based on previous experiences or societal standards.

Performance

The manner in which an individual or group executes or accomplishes a task, job, or function measured against preset known standards.