Question
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
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 Materials handling Manufacturing supervision Assembly Machine setup Inspection and testing Packaging Allocation Base Number of parts Costing Rate $ 4.00 per part Hours of machine time $ 14.96 per hour Number of parts Each setup Logged hours Logged hours $ 4.10 per part $ 57.30 per setup $ 46.30 per hour $ 20.30 per hour LCI currently sells the B-13 model for $5,375 and the F-32 model for $5.700. Manufacturing costs and activity usage for the two products are as follows: 8-13 Direct materials Number of parts $ 165.30 F-32 $ 76.24 176 136 Machine hours Inspection time 8.70 4.36 3.30 2.40 Packaging time 1.70 1.30 Setups 5 + The product cost for model F-32 is
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