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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
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 Costing Rate Materials handling Mumber of parts 3.90 per part Manufacturing supervision Hours of machine time 14.95 per hour Assembly Number of parts $ 4.05 per part Machine setup Each setup $ 57.25 per setup Inspection and testing Logged hours $ 46.25 per hour Packaging Logged hours 208.25 per hour LCI currently sells the B-13 model for $5,150 and the F-32 model for $5,420. Manufacturing costs and activity usage for the two products are as follows: B-13 F-32 Direct materials $ 165.25 76.20 Number of parts 175 135 Machine hours 8.65 4.35 Inspection time 3.20 2.30 Packaging time 1.65 1.25 Setups 6 5 The product cost for model B-13 is
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