Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses. There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in binoculars, cameras, and similar equipment (B-13). The manufacturing cost of each unit is calculated using activity-based costing, using the following manufacturing cost pools:

Cost Pools	Allocation Base	Costing Rate
Materials handling	Number of parts	$	2.60	per part
Manufacturing supervision	Hours of machine time	$	14.82	per hour
Assembly	Number of parts	$	3.40	per part
Machine setup	Each setup	$	56.60	per setup
Inspection and testing	Logged hours	$	45.60	per hour
Packaging	Logged hours	$	19.60	per hour

LCI currently sells the B-13 model for $2,225 and the F-32 model for $1,780. Manufacturing costs and activity usage for the two products are as follows:

	B-13				F-32
Direct materials	$	164.60			$	75.68
Number of parts		162				122
Machine hours		8.00				4.22
Inspection time		1.90				1.00
Packaging time		1.00				0.60
Setups		5				4

The profit margin based on manufacturing cost for model F-32 is:

Multiple Choice

• $626.02.

• $868.61.

• $701.62.

• $725.09.

• $704.11.