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 Pools	Allocation Base	Costing Rate
1. Materials handling	Number of parts	$2.40 per part
2. Manufacturing supervision	Hours of machine time	$14.80 per hour
3. Assembly	Number of parts	$3.30 per part
4. Machine setup	Each setup	$56.50 per setup
5. Inspection and testing	Logged hours	$45.50 per hour
6. Packaging	Logged hours	$19.50 per hour

LCI currently sells the B-13 model for $1,925 and the F-32 model for $982. Manufacturing costs and activity usage for the two products are as follows:

	B-13	F-32
Direct materials	$188.50	$109.90
Number of parts	195	115
Machine Hours	8.5	8.2
Inspection time	1.75	1.25
Packaging time	0.75	0.5
Set-ups	4	1

7) The product cost for model B-13 is calculated to be:

Answer: ___________________

8) The product cost for model F-32 is calculated to be:

Answer: ___________________

9) The product margin for model B-13 is calculated to be:

Answer: _____________________

10) The product margin for model F-32 is calculated to be:

Answer: ______________________

Answer rating: 100% (QA)

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