The following table shows the manufacturing cost of each unit is calculated, using activity-based costing, for these manufacturing cost pools. Cost Pools Materials handling Manufacturing supervision Assembly Machine setup Inspection and testing Packaging Allocation Base Number of parts Hours of machine time Number of parts Each setup Logged hours Logged hours Costing Rate $ 2.70 per part $23.80 per hour $ 3.45 per part $45.80 per setup $44.00 per hour $21.00 per hour BSI currently sells the A-10 model for $1,530 and the A-25 model for $1,030. Manufacturing costs and activity usage for the two products follow: A-10 Direct materials $137.76 A-25 $69.44 Number of parts 124 95 Machine-hours 6.90 4.60 Inspection time 1.30 0.75 Packing time 0.85 Setups 8 0.46 4 Required: 1. Calculate the product cost and product margin for each product. 2. A new competitor has entered the market for lens-polishing equipment with a superior product at significantly lower prices, $1,295 for the A-10 model and $880 for the A-25 model. To try to compete, BSI has made some radical improvements in the design and manufacturing of its two products. The materials costs and activity usage rates have been decreased significantly, as follows: Direct materials A-10 $84.65 A-25 $45.45 Number of parts 116 87 Machine-hours 6.5 2.6 Inspection time 1.3 0.65 Packing time 0.79 0.26 < Prev 2 of 10 Next >