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 $ 2.50 per part Manufacturing supervision Hours of machine time $ 14.81 per hour Assembly Number of parts $ 3.35 per part Machine setup Each setup $ 56.55 per setup Inspection and testing Logged hours $ 45.55 per hour Packaging Logged hours $ 19.55 per hour LCI currently sells the B-13 model for $2,000 and the F-32 model for $1,500. Manufacturing costs and activity usage for the two products are as follows: B-13 F-32 Direct materials $ 164.55 $ 75.64 Number of parts 161 121 Machine hours 7.95 4.21 Inspection time 1.80 0.90 Packaging time 0.95 0.55 Setups 4 3 The market price for B-13 and F-32 are reduced to $1,920 and $1,375 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from B-13 in order to achieve the target cost for B-13 (round up to whole units)? Multiple Choice 14 45 33 24 52
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 $ 2.50 per part Manufacturing supervision Hours of machine time $ 14.81 per hour Assembly Number of parts $ 3.35 per part Machine setup Each setup $ 56.55 per setup Inspection and testing Logged hours $ 45.55 per hour Packaging Logged hours $ 19.55 per hour LCI currently sells the B-13 model for $2,000 and the F-32 model for $1,500. Manufacturing costs and activity usage for the two products are as follows: B-13 F-32 Direct materials $ 164.55 $ 75.64 Number of parts 161 121 Machine hours 7.95 4.21 Inspection time 1.80 0.90 Packaging time 0.95 0.55 Setups 4 3 The market price for B-13 and F-32 are reduced to $1,920 and $1,375 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from B-13 in order to achieve the target cost for B-13 (round up to whole units)? Multiple Choice 14 45 33 24 52
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
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 | $ 2.50 | per part |
| Manufacturing supervision | Hours of machine time | $ 14.81 | per hour |
| Assembly | Number of parts | $ 3.35 | per part |
| Machine setup | Each setup | $ 56.55 | per setup |
| Inspection and testing | Logged hours | $ 45.55 | per hour |
| Packaging | Logged hours | $ 19.55 | per hour |
LCI currently sells the B-13 model for $2,000 and the F-32 model for $1,500.
| B-13 | F-32 | |
|---|---|---|
| Direct materials | $ 164.55 | $ 75.64 |
| Number of parts | 161 | 121 |
| Machine hours | 7.95 | 4.21 |
| Inspection time | 1.80 | 0.90 |
| Packaging time | 0.95 | 0.55 |
| Setups | 4 | 3 |
The market price for B-13 and F-32 are reduced to $1,920 and $1,375 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from B-13 in order to achieve the target cost for B-13 (round up to whole units)?
Multiple Choice
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14
-
45
-
33
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24
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52
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