Posted: July 7th, 2016

Compute the maintenance cost per roll for each type of pipe after JIT is installed?

The maintenance costs totaled $540,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
Machine Hours Quantity Produced
4-inch 10,000 3,750 rolls
6-inch 14,000 4,000 rolls
8-inch 21,000 5,000 rolls

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 $540,000; however, these costs are now traceable to each cell.
Cell, 4-inch $ 90,000
Cell, 6-inch 160,000
Cell, 8-inch 290,000

Required:
a. Compute the maintenance cost per roll for each type of pipe before JIT is installed.
b. Compute the maintenance cost per roll for each type of pipe after JIT is installed.
c. Explain why the JIT maintenance cost per roll is more accurate than the cost per roll using the traditional approach.

2. Gibson, Inc., has developed ideal standards for four activities: labor, materials, inspection, and receiving.

Information is as follows:

Activity Activity Driver SQ AQ SP
Labor Hours 500 550 $ 32
Materials Pounds 2,000 2,500 48
Inspection Inspection hours 0 375 22
Receiving Orders 60 75 800

The actual prices paid per unit of each activity driver were equal to the standard prices.

Required:

Complete the following cost report.

Activity Value-Added Non-value-Added Actual

Labor $_____________ $_____________ $____________

Materials _____________ _____________ ____________

Inspection _____________ _____________ ____________

Receiving _____________ _____________ ____________

Totals $_____________ $_____________ $____________

3 Marshek Industries has the theoretical capability to produce 119,000 units per month but currently produces 102,000 units. The conversion cost for the month is $3,750,000. There are 8,500 production hours available within the plant per month. In addition to processing time, to produce a unit takes 15 minutes of move time and 10 minutes of wait time.

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