Weider Manufacturing Company changed to a JIT production system by setting up manufacturing cells dedicated to the production of a single product. The manufac- turing costs assigned to one electronic component before and after installing JIT are shown below. In both the pre- and post-JIT setting, 200,000 units of the component are manufactured. The post-JIT manufacturing cell for this component has all machin- ery necessary for the component’s production. Cell workers do all direct and indirect labor for the cell, including cellclean up at the end of each day. There is a submeter that measures electricity usage by the cell.

                                                       Before                      After  

 

Direct materials	$ 60,000	$ 60,000
Direct labor	40,000	50,000
Maintenance	50,000	30,000
Electricity	10,000	8,000
Depreciation	12,500	10,000
Material handling	8,000	4,000
Engineering	9,500	8,000
Setups	15,000	8,400
Building and grounds	11,800	12,400
Supplies	4,000	3,000
Supervision (plant)	8,200	8,200
Cell supervision	0	30,000
Departmental supervision	    18,000	             0
Total	$262,000	$238,000

 

 

 

 

 

 

 

Required

1.    Compute the unit cost of the product before and after JIT. Explain why the JIT unit cost is more accurate.

2.    Identify the costs in the JIT environment that are directly traceable to the elec- tronic component. Classify the remaining costs as those that must be traced using drivers or allocated if truly indirect.