Lens Care Inc LC) manufactures specialized equipment for polishing optical lense

Question

Lens Care Inc LC) manufactures specialized equipment for polishing optical lenses. There are two models -one mainly used for fine eyewear (F-32) and another for binoculars, cameras, and similar equipment (B-13). The manufecturing cost of eech unit is calculeted using activity-besed costing, using the following manufecturing cost pools: Cost Pools Materials handling Manufacturing supervision Hours of machine time Assembly Machine setup Inspection and testing Allocation Base ting Rate Number of parts $2.40 per part $14.80 per hour r$3.30 per part Number of parts Each setup Logged hours Logged hours $56.50 per setup $45.50 per hour $19.50 per hour LC currenty sells the B-13 mode for $31775 and the F-32 model for $1.220. Manufacturing costs and activity usage for the two are as follows Direct materials Number of parts Machine hours Inspection time Packaging time Setups B-13 F-32 $164.50 $7560 160.00 120.00 7.904.20 170 0.80 0.90 0.50 3.002.00 rahe ceaetae te8-ta and F 3 sire reduced to $1695 and $1.09s especthwely, and Lens Care weants to maintan market share and protitability what isthe trgetcost for B-13 and F-32 round to nearest whole dollarj? B-13 F-32 A) $80 $120 B) $1,378 $125 318 $856 D) $1,378 $856 E) $318 $422

Explanation / Answer

Ans:D (1378/856)

New Sale price - (old Sale price - Product Cost) B-13 Product Cost
Materials 164.50
Handling 2.40*160 =384.00
Supervision 14.80*7.90 = 116.92
Assembly 3.30*160 = 528.00
Setup 56.50*3 = 169.50
I&T 45.50 * 1.7 =77.35
Packaging 19.50*.9 = 17.55 Total B-13 Product Cost = 1457.82

F-32 Product Cost
Materials 75.60
Handling 2.40*120=288.00
Supervision 14.80*4.20= 62.16
Assembly 3.30*120= 396.00
Setup 56.50*2.00= 113.00
I&T 45.50 * 0.80=36.40
Packaging 19.50*.0.50= 9.5
Total F-32 Product Cost = 980.91 B-13
1695-(1775-1457.82)= 1378
F-32
1095-(1220-980.91) = 856

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