Prior to Installing a JIT System, Clarendon Company Used Machine

question 129

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
The maintenance cost per roll of 8-inch insulation before JIT is installed would be

• A) $20.00.
• B) $16.00.
• C) $9.33.
• D) $6.40.

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