Bowman Specialists Inc. (BSI) manufactures specialized equipment for polishing optical lenses. There are two modelsone (A25) principally used for fine eyewear and the other (A10) for lenses used in binoculars, cameras, and similar equipment. The manufacturing cost of each unit is calculated, using activity-based costing, for these manufacturing cost pools: Cost Pools Allocation Base Costing Rate Materials handling Number of parts $ 2.70 per part Manufacturing supervision Hours of machine time $ 23.80 per hour Assembly Number of parts $ 3.45 per part Machine setup Each setup $ 45.80 per setup Inspection and testing Logged hours $ 44.00 per hour Packaging Logged hours $ 21.00 per hour BSI currently sells the A10 model for $1,310 and the A25 model for $930. Manufacturing costs and activity usage for the two products follow: A10 A25 Direct materials $ 137.76 $ 69.44 Number of parts 124 95 Machine-hours 6.9 4.6 Inspection time 1.3 0.75 Packing time 0.85 0.46 Setups 2.60 1.3 Required: 1. Calculate the product cost and product margin for each product. (Round your answers to 2 decimal places.) 2-a. A new competitor has entered the market for lens-polishing equipment with a superior product at significantly lower prices, $1,095 for the A10 model and $780 for the A25 model. To try to compete, BSI has made some radical improvements in the design and manufacturing of its two products. The materials costs and activity usage rates have been decreased significantly: A10 A25 Direct materials $ 84.65 $ 45.45 Number of parts 116 87 Machine-hours 6.5 2.6 Inspection time 1.3 0.65 Packing time 0.79 0.26 Setups 1.3 1.3 Calculate the total product costs with the new activity usage data. (Round your answers to 2 decimal places.) 2-b. Can BSI make a positive gross margin with the new costs, assuming that it must meet the price set by the new competitor? Yes No 4. What cost management method might be useful to BSI at this time? Kaizen costing Life-cycle costing Activity-based costing Target costing