Question

Seemore Company manufactures binoculars. The actual costs for 2013 and 2014 were as follows: 2013 2014 Direct materials: Plastic case $ 8.00 $ 7.60 Lens set 34.00 34.40 Direct labor 64.00 (1.6 hours) 60.00 (1.5 hours) Indirect manufacturing costs: Variable 16.00 14.20 Fixed 4.00 (100,000 units) 3.80 (120,000 units) Beginning in 2014, Seemore implemented a continuous improvement program that required a first-year cost reduction target of a 7 percent reduction of the 2013 base. Seemore's continuous improvement target for direct labor in 2014 was:

Answer 1

Answer:

$7.07

Explanation:

Calculation to determine what Seemore's continuous improvement target for direct labor in 2014 was:

2014 Continuous improvement target for direct labor=$ 7.60 – ($ 7.60 × 0.07)

2014 Continuous improvement target for direct labor=$ 7.60 -$0.532

2014 Continuous improvement target for direct labor= $7.07

Therefore Seemore's continuous improvement target for direct labor in 2014 was: $7.07