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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
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 (8-13). 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 $ 3.30 per part Manufacturing supervision Hours of machine time $14.89 per hour Assembly Number of parts $ 3.75 per part Machine setup Each setup $56.95 per setup Inspection and testing Logged hours $45.95 per hour Packaging Logged hours $19.95 per hour LCI currently sells the B-13 model for $3,800 and the F-32 model for $3,740. Manufacturing costs and activity usage for the two products are as follows: Direct materials Number of parts Machine hours Inspection time Packaging time Setups B-13 $164.95 169 8.35 2.60 1.35 6 F-32 $ 75.96 129 4.29 1.70 0.95 5 The profit margin based on manufacturing cost for model F-32 is: Multiple Choice O $2,551.48 O $2,384.49. O $2,308.89. $2,386.98 $2,407.96
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