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Lens Care Inc. (LCI) manufactures specialized equipment for...

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Lens Care Inc. (LCI) manufactures specialized equipment for...

Lens Care Inc. (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 PoolsAllocation BaseCosting RateMaterials handlingNumber of parts$3.50per partManufacturing supervisionHours of machine time$14.91per hourAssemblyNumber of parts$3.85per partMachine setupEach setup$57.05per setupInspection and testingLogged hours$46.05per hourPackagingLogged hours$20.05per hour

 

LCI currently sells the B-13 model for $4,250 and the F-32 model for $4,300. Manufacturing costs and activity usage for the two products are as follows:

 

 B-13 F-32Direct materials$165.05  $76.04 Number of parts 171.00   131 Machine hours 8.45   4.31 Inspection time 2.80   1.90 Packaging time 1.45   1.05 Setups 1   0 

 

The market price for B-13 and F-32 are reduced to $4,170 and $4,175 respectively. To achieve the target cost, Lens Care plans to reduce materials handling costs. How many parts must be removed from F-32 in order to achieve the target cost for F-32 (round up to whole units)?

Answer & Explanation

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Answered by Samziroh325 on coursehero.com

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