If the market price for B-13 and F-32 are reduced to $4,845 and $5,015 respectively, and Lens Care wants to maintain market share and profitability, what is the target cost for B-13 and F-32 (round to nearest whole dollar.

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	$	4.10	per part
Manufacturing supervision	Hours of machine time	$	14.97	per hour
Assembly	Number of parts	$	4.15	per part
Machine setup	Each setup	$	57.35	per setup
Inspection and testing	Logged hours	$	46.35	per hour
Packaging	Logged hours	$	20.35	per hour

LCI currently sells the B-13 model for $5,600 and the F-32 model for $5,980. Manufacturing costs and activity usage for the two products are as follows:

	B-13				F-32
Direct materials	$	165.35			$	76.28
Number of parts		177				137
Machine hours		8.75				4.37
Inspection time		3.40				2.50
Packaging time		1.75				1.35
Setups		2				1

If the market price for B-13 and F-32 are reduced to $5,520 and $5,855 respectively, and Lens Care wants to maintain market share and profitability, what is the target cost for B-13 and F-32 (round to nearest whole dollar)?

	B-13				F-32
A)	$	687.00			$	612.00
B)	$	1,985.00			$	617.00
C)	$	925.00			$	1,348.00
D)	$	1,985.00			$	1,348.00
E)	$	925.00			$	914.00

Answer rating: 100% (QA)

answere F32 Direct materials 7560 Manufacturing supervision 6216 1480420 Assembly 396 ... View the full answer