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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 $ 3.60 per part Manufacturing supervision Hours of machine time $ 14.92 per hour Assembly Number of parts $ 3.90 per part Machine setup Each setup $ 57.10 per setup Inspection and testing Logged hours $ 46.10 per hour Packaging Logged hours $ 20.10 per hour   LCI currently sells the B-13 model for $4,475 and the F-32 model for $4,580. Manufacturing costs and activity usage for the two products are as follows:     B-13 F-32 Direct materials $ 165.10 $ 76.08 Number of parts 172 132 Machine hours 8.50 4.32 Inspection time 2.90 2.00 Packaging time 1.50 1.10 Setups 5 4   The product cost for model F-32 is:   Multiple Choice   $1,397.64.   $1,473.24.   $1,651.67.   $1,950.15.   $1,785.65.

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 $ 3.60 per part Manufacturing supervision Hours of machine time $ 14.92 per hour Assembly Number of parts $ 3.90 per part Machine setup Each setup $ 57.10 per setup Inspection and testing Logged hours $ 46.10 per hour Packaging Logged hours $ 20.10 per hour   LCI currently sells the B-13 model for $4,475 and the F-32 model for $4,580. Manufacturing costs and activity usage for the two products are as follows:     B-13 F-32 Direct materials $ 165.10 $ 76.08 Number of parts 172 132 Machine hours 8.50 4.32 Inspection time 2.90 2.00 Packaging time 1.50 1.10 Setups 5 4   The product cost for model F-32 is:   Multiple Choice   $1,397.64.   $1,473.24.   $1,651.67.   $1,950.15.   $1,785.65.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
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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 $ 3.60 per part
Manufacturing supervision Hours of machine time $ 14.92 per hour
Assembly Number of parts $ 3.90 per part
Machine setup Each setup $ 57.10 per setup
Inspection and testing Logged hours $ 46.10 per hour
Packaging Logged hours $ 20.10 per hour

 

LCI currently sells the B-13 model for $4,475 and the F-32 model for $4,580. Manufacturing costs and activity usage for the two products are as follows:

 

  B-13 F-32
Direct materials $ 165.10 $ 76.08
Number of parts 172 132
Machine hours 8.50 4.32
Inspection time 2.90 2.00
Packaging time 1.50 1.10
Setups 5 4

 

The product cost for model F-32 is:

 

Multiple Choice
  •  
    $1,397.64.
  •  
    $1,473.24.
  •  
    $1,651.67.
  •  
    $1,950.15.
  •  
    $1,785.65.
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