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 | $ 3.70 | per part |
Manufacturing supervision | Hours of machine time | $ 14.93 | per hour |
Assembly | Number of parts | $ 3.95 | per part |
Machine setup | Each setup | $ 57.15 | per setup |
Inspection and testing | Logged hours | $ 46.15 | per hour |
Packaging | Logged hours | $ 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:
B-13 | F-32 | |
---|---|---|
Direct materials | $ 165.15 | $ 76.12 |
Number of parts | 173 | 133 |
Machine hours | 8.55 | 4.33 |
Inspection time | 3.00 | 2.10 |
Packaging time | 1.55 | 1.15 |
Setups | 7 | 6 |
The market price for B-13 and F-32 are reduced to $4,620 and $4,735 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from F-32 in order to achieve the target cost for F-32 (round up to whole units)?
Multiple Choice
48
41
17
33
29
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