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 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:
B-13 F-32 Direct materials $ 164.95 $ 75.96 Number of parts 169 129 Machine hours 8.35 4.29 Inspection time 2.60 1.70 Packaging time 1.35 0.95 Setups 6 5
The market price for B-13 and F-32 are reduced to $3,720 and $3,615 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from B-13 in order to achieve the target cost for B-13 (round up to whole units)?
Multiple Choice
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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 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 | $ 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:
B-13 | F-32 | |
---|---|---|
Direct materials | $ 164.95 | $ 75.96 |
Number of parts | 169 | 129 |
Machine hours | 8.35 | 4.29 |
Inspection time | 2.60 | 1.70 |
Packaging time | 1.35 | 0.95 |
Setups | 6 | 5 |
The market price for B-13 and F-32 are reduced to $3,720 and $3,615 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from B-13 in order to achieve the target cost for B-13 (round up to whole units)?
Multiple Choice
- 43
- 50
- 31
- 12
- 22
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