Prior to install a JIT system, Plasticize COmpany used machine hours to assign maintenance costs to it three products of 3-inch, 5inch and 7-inch plastic tubing. The maintenance costs totaled 120,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:

3 inches Machine hours: 1,000 Qnty produced: 400 rolls

5-inches Machine hours: 1,500 Qnty produced: 450 rolls

7-inches Machine hours: 2,500 Qnty produced: 1,250 rolls

After installing JIT, three manufacturing cells were created and the cell workers were trained to perfom maintenance. Maintenance costs for the three cells still totaled 120,000; however, these costs are now treaceable to each cell. Cell 3 inches $20,000, Cell 5 inches 32,400 and Cell 7-inches 67,600

1) Compute the maintenance cost per roll for each type of tubing before JIT is installed

2) Compute the maintenance cost per roll for each type of tubing after JIT is installed

3) Explain why the JIT maintenance cost per roll is more accurate thatn the cost per roll using the traditional approach.

Answer rating: 100% (QA)

Answer of part 1 In order to make a proper assessment of cost it is necessary to carefully study each elements of cost separately Some cost elements are easily identifiable against a specific job Henc... View the full answer