Lens Care Inc (LC) manufactures specialized equipment for polishing optical lens

ID: 2544603 • Letter: L

Question

Lens Care Inc (LC) manufactures specialized equipment for polishing optical lenses. There are two models-one mainly used for fine eyewear (F-32) and another for lenses 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 Materials handling Allocation Base Number of parts Costing Rate $2.40 per part $14.80 per hou $3.30 per part Manufacturing supervisionHours of machine time Assembly Machine setup Inspection and testing Packaging Number of parts Each setup $56.50 per setup ours$45.50 per hour $19.50 per hour Logged hours LCI currently sels the B-13 model for $1.775 and the F 32 model for $1,220. Manufactur ing costs and activity usage for the two pioduets are as follows Direct materials Number of parts Machine hours Inspection time Packaging time Setups To achieve the target cost, Lens Care units)? B-13 F-32 $164.50 $75.60 160.00 120.00 790 4.20 170 0.80 0.90 0.50 3002.00 plans to reduce materieis handling costs, How many perts must be removed from F-32 in order to achieve the target cost for F-32 (round up to whole materia's h O 22 O 46 O 34 O 53

Explanation / Answer

Solution: 34

Working

Rate

F-32

Materials

75.6

Materials handling

2.4

288

Mfg supervision

14.8

62.16

Assembly

3.3

396

Set-ups

56.5

113

Inspection and tests

45.5

36.4

Packaging

19.5

9.75

980.91

($981 - 856)/2.40 = 52.08, round up to 53