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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Q8
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.
| 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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