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Lens Care Incorporated (LCI) manufactures specialized equipment for polishing optical lenses. There are two models one mainly used for fine eyewear (F-32) and another for
Lens Care Incorporated (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 Number of parts Hours of machine time Costing Rate $ 3.70 per part $ 14.93 per hour $3.95 per part Materials handling Manufacturing supervision Assembly Machine setup Inspection and testing Packaging Number of parts Each setup Logged hours Logged hours $ 57.15 per setup $ 46.15 per hour $ 20.15 per hour LCI currently sells the B-13 model for $4,700 and the F-32 model for $4,860. 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 $ 165.15 F-32 $ 76.12 173 133 8.55 4.33 3.00 2.10 1.55 1.15 7 6 If the market price for B-13 and F-32 are reduced to $4,620 and $4,735 respectively, and Lens Care wants to maintain market share and profitability, what is the target cost for B-13 and F-32 (round to nearest whole dollar)? B-13 A) $ 808.00 B) $ 2,106.00 c) $ 1,046.00 F-32 $ 760.00 $ 765.00 $ 1,496.00 D) $ 2,106.00 $ 1,496.00 E) $ 1,046.00 $ 1,062.00 Multiple Choice Option A Option B Option C Option D Option E
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