Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 11, Problem 14E
1.
To determine
Calculate the pre-maintenance cost per unit for the product.
2.
To determine
Calculate the post-purchase cost per unit of the products.
3.
To determine
Describe the reason for maintenance cost per unit is more accurate than pre cost.
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Prior to install a JIT system, Buckner Company, a producer of automobile parts, used maintenance hours to assign maintenance costs to its three products (wheels, rims, and ball bearings). The maintenance costs totaled $12,000,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
Wheels: Machine hours: 150,000 Qnty produced: 187,500
Rims: Machine hours: 300,000 Qnty produced: 281,250
Bearings: Machine hours: 350,000 Qnty produced: 350,000
After installing JIT, three manufacturing cells were created and the cell workers were trained to perfom preventive maintenance and minor repairs. A full-time maintenance person was also assigned to each cell. Maintenance costs for the three cells still totaled $12,000,000; however, these costs are now treaceable to each cell as follows:
Cell, wheels: $2,640,000
Cell, rims: 4,560,000
Cell, bearings: 5,600,000
1) Compute the pre-JIT maintenance cost per unit for each product (round answers to two…
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:
Machine Hours
Quantity Produced
6-inch
12,000
31,250 rolls
8-inch
20,000
25,000 rolls
11-inch
18,000
12,000 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 $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
To automate one of its production processes, Milwaukee Corporation bought three flexible manufacturing cells at a price of $400,000 each. When they were delivered, Milwaukee paid freight charges of $30,000 and handling fees of $15,000. Site preparation for these cells cost $50,000. Six employees, each earning $15 an hour, worked five 40-hour weeks to set up and test the manufacturing cells. Special wiring and other materials applicable to the new manufacturing cells cost $2,000. Determine the cost basis (the amount to be capitalized) for these cells.
Chapter 11 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 11 - What does it mean to obtain a competitive...Ch. 11 - What is customer value? How is customer value...Ch. 11 - Prob. 3DQCh. 11 - What are organizational and operational...Ch. 11 - What is the difference between a structural cost...Ch. 11 - What is value-chain analysis? What role does it...Ch. 11 - Prob. 7DQCh. 11 - What are the three viewpoints of product life...Ch. 11 - What are the four stages of the marketing life...Ch. 11 - Prob. 10DQ
Ch. 11 - What are the four stages of the consumption life...Ch. 11 - Life-cycle cost reduction is best achieved during...Ch. 11 - Prob. 13DQCh. 11 - Prob. 14DQCh. 11 - Prob. 15DQCh. 11 - Woodruff Company is currently producing a...Ch. 11 - Ventana Company is a car window repair and...Ch. 11 - Deeds Company sells custom-made machine parts to...Ch. 11 - Kagle design engineers are in the process of...Ch. 11 - Hepworth Company has implemented a JIT system and...Ch. 11 - Keith Golding has decided to purchase a personal...Ch. 11 - Prob. 7ECh. 11 - Classify the following cost drivers as structural,...Ch. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Assign the customer-related activity costs to each...Ch. 11 - The following series of statements or phrases are...Ch. 11 - Assume that a company has recently switched to JIT...Ch. 11 - Prob. 14ECh. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Prob. 18ECh. 11 - Which of the following is a true statement about...Ch. 11 - Prob. 20ECh. 11 - This year, Hassell Company will ship 4,000,000...Ch. 11 - Prob. 22ECh. 11 - The second stage of customer-based activity-based...Ch. 11 - Evans, Inc., has a unit-based costing system....Ch. 11 - Cortalo, Inc., manufactures riding lawn mowers....Ch. 11 - Moss Manufacturing produces several types of...Ch. 11 - Maxwell Company produces a variety of kitchen...Ch. 11 - Prob. 28PCh. 11 - Nico Parts, Inc., produces electronic products...Ch. 11 - Jolene Askew, manager of Feagan Company, has...Ch. 11 - Homer Manufacturing produces different models of...Ch. 11 - Mott Company recently implemented a JIT...Ch. 11 - Southward Company has implemented a JIT flexible...Ch. 11 - Prob. 34P
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