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MAXImum [283]
4 years ago
7

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 Allocations 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 $1,690 and the F-32 model for $922. Manufacturing costs and activity usage for the two products are as follows:________.
B-13 F-32
Direct materials $150.50 $95.90
Number of parts 180.00 110.00
Machine Hours 7.50 6.20
Inspection time 1.50 1.25
Packaging time .75 .50
Set-ups 3.00 2.00
1) The product cost for model B-13 is calculated to be:
2) The product cost for model F-32 is calculated to be:
3) The product margin for model B-13 is calculated to be:
4) The product margin for model F-32 is calculated to be:
Business
1 answer:
zmey [24]4 years ago
8 0

Answer:

1.  Product cost for model B-13

Various Manufacturing cost =  Cost driver * Activity Rate

Materials handling = 180 parts x $2.40 = $432.00

Manufacturing Supervision = 7.50 machine hours x $14.80 = $111.00

Assembly = 180 parts * $3.30 = $594.00

Machine setup = 3 setups * $56.50 = $169.50

Inspection and testing = 1.50 inspection time * $45.50 = $68.25

Packaging = 0.75 packaging time * $19.50 = $14.63

Total Manufacturing cost =$432.00 + $111.00 +  $594.00 + $169.50   + $68.25  + $14.63  = $1389.38

Particulars                    Amount$

Direct Materials           150.50

Manufacturing cost     <u>1,389.38</u>

Total Product cost      <u>1,539.88</u>

The product cost for model B-13 is $1,539.88

2.  Product cost for model F-32

Various Manufacturing cost =  Cost driver * Activity Rate

Materials handling = 110 parts * $2.40 = $264.00

Manufacturing Supervision hours = 6.20 machine hours * $14.80 = $91.76

Assembly = 110 parts * $3.30 = $363.00

Machine setup = 2 setups * $56.50 = $113.00

Inspection and testing = 1.25 inspection time * $45.50 = $56.88

Packaging = 0.50 packaging time * $19.50 = $9.75

Total Manufacturing cost = $264.00  + $91.76  + $363.00 + $113.00  + $56.88 + $9.75 = $898.39

Particulars                Amount$

Direct Materials         95.90

Manufacturing cost   <u>898.39</u>

Total Product cost    <u>994.29</u>

Hence, the product cost for model F-32  is $994.29.

3. Particulars              Amount$

Sales                            1,690.00

Less: Product cost      <u>1,539.88</u>

Product Margin          <u>150.12</u>

Hence, the product margin for Model B-13 is $150.12

4. Particulars           Amount$

Sales                         922.00

Less: Product cost   <u>994.29</u>

Product Margin       <u>-72.29</u>

Hence, the product margin for Model F-32 is -$72.29

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Explanation:

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Using a periodic specific identification, Delta Diamonds' Inventory after the December 24 sale is <u>$2,250</u>.

<h3>What is the specific identification method?</h3>

The specific identification method is an inventory method that identifies specific inventories sold and uses their specific costs in valuing the cost of goods sold.

<h3>Data and Calculations:</h3>

Date             Units       Unit Cost         Total       Balance

June 1               1               $500          $500        $500

July 9               2              $550         $1,100      $1,600

Sept. 23           2              $600        $1,200     $2,800

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4 0
2 years ago
Equipment purchased at the beginning of the fiscal year for $150,000 is expected to have a useful life of 5 years, or 15,000 ope
CaHeK987 [17]

Answer:

(a). Depreciation for 1st year= $24,000

Depreciation for 2nd year= $24,000

(b). 1st Year Depreciation = $20,000

for 2nd year depreciation = $26,000

(c) 1st year Depreciation= $60,000

2nd year Depreciation = $36,000

Explanation:

a).

Annual Depreciation of Equipment = (Cost of Equipment - Residual Value) ÷ Useful Life of Equipment

= ($150,000 - $30,000) ÷ 5

= $24,000

Rate of Straight Line Depreciation = Annual Depreciation of Equipment ÷ (Cost of Equipment - Residual Value) × 100

= 24,000 ÷ ( $150,000 - 30,000) × 100

= $24,000 ÷ $120,000 × 100 = 20%

Depreciation for 1st year= $24,000

Depreciation for 2nd year= $24,000

b). Unit Of Production For 1st Year Depreciation= (Cost Of Equipment -Residual Value) × Annual Production Units ÷ Total Operating Hours

= ($150,000 - $30,000) × 2,500 ÷ 15,000 = $20,000

Unit of Production for 2nd year depreciation = ( $150,000 - $30,000) × 32,50 ÷ 15,000

= $26,000

c). Declining Balance Depreciation Rate = Straight Line Depreciation Rate × 2

= 20% × 2 = 40%   (Because Declining Balance at Twice the Straight Line Rate)

1st year Depreciation= $150,000 × 40÷100 = $60,000

2nd year Depreciation = ($150,000 - $60,000) × 40÷100 =$36,000

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Answer:

$112,500

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Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life)  

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Book value at the beginning of year 2 =  $450,000 - $225,000 =  $225,000

Depreciation expense in year 2 = 2/4 x $225,000 = $112,500

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