Bowman Specialists Inc manufactures specialized equipment of polishing optical lenses.

Bowman Specialists Inc. {BSI} manufactures specialized equipment for polishing optical lenses. There are two modelsone (1425] principally used for ne eyewear and the other [A10} for lenses used in binoculars, cameras, and similar equipment Thefollowing table shows the manufacturing cost of each unit is calculated, using activitybased costing, for these manufacturing cost pools. Cost Pools Allocation Base Costing Rate Materials handling Number of parts $ 3.40 per part Manufacturing supervision Hours of machine time $23.60 per hour Assembly Number of parts $ 5.55 per part Machine setup Each setup $42.40 per setup Inspection and testing Logged hours $42.00 per hour Packaging Logged hours $12.00 per hour BSI currently sells the A1O model for $4,810 and the A25 model for $1,995. Manufacturing costs and activity usage for the two products follow: A-1B A-ZS Direct materials $141.26 $6?.44 Number of parts 127 I318 Machinehours 7.80 5. 20 Inspection time 1.60 8.90 Packing time 1.00 8.52 Setups 34 1? Required: 1. Calculate the product cost and product margin for each product. 2. A new competitor has entered the market for lens-polishing equipment with a superior product at signicantly lower prices, $2,395 for the 3410 model and $1,870 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 signicantly, as follows: Al AZS Direct materials $ 98.65 $48.45 Number of parts 122 '33 Machinehours 8.0 3.2 Inspection time 1.6 8.80 Packing time 8.88 8.32 Setups 1? 1? 2-a. Calculate the total product costs with the new activity usage data. 2b. Can BSI make a positive gross margin with the new costs, assuming that it must meet the price set by the new competitor? 4. What cost management method might be useful to BSI at this time? Calculate the product cost and product margin for each product. {Reund your answers to 2 decimal places.) _ Calculate the total product costs With the new activity usage data. (Round 15mm answers to 2 decimal places.) Product-mt __ RED] 1 REQ ZA FLED ZE RED 4 _ an ESI make a positive gross margin with the new costs , assuming that it must meet the price set by the new competitor ?" O YES 10 \\NORED ] REQ ZA RED ZE REq 4 What cost management method might be Useful to ESL at this time ? Target casting Activity -based costing 10101010 Life - cycle costing Kaizen costing