Precision Lens Company manufactures sophisticated lenses and mirrors used in lar
ID: 2773348 • Letter: P
Question
Precision Lens Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information.
Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one mirror would be what amount? (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)
Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens would be what amount? (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)
Under activity-based costing (ABC), the material-handling costs allocated to one mirror would be what amount? The cost driver for the material-handling activity is the number of material moves. (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)
4.
Under activity-based costing (ABC), the material-handling costs allocated to one lens would be what amount? The cost driver for the material-handling activity is the number of material moves. (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)
Precision Lens Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information.
Explanation / Answer
Answer:1 Material-handling cost per mirror:
=[$100,920/((29*220)+(29*220))*]*220
=$1740
*The total number of direct-labor hours.
Answer:2 Material-handling cost per lens = $1740. The analysis is identical to that given for requirement (1).
Answer:3 Material-handling cost per mirror:
=[[$100920/(16+6)*]*16**]/29
=$2530.91
*The total number of material moves.
**The number of material moves for the mirror product line.
Answer:4 Material-handling cost per lens:
=[[$100920/(16+6)*]*6**]/29
=$949.09
*The total number of material moves.
**The number of material moves for the lens product line.
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