CIMA Engineering Uses a Manufacturing Costing System with One Direct

CIMA Engineering uses a manufacturing costing system with one direct cost category (direct materials)and three indirect cost categories:
a.Setup,production order,and materials-handling costs that vary with the number of batches.
b.Manufacturing operations costs that vary with machine-hours.
c.Costs of engineering changes that vary with the number of engineering changes made.
In response to competitive pressures at the end of 2016,Medical Instruments used value-engineering
techniques to reduce manufacturing costs.Actual information for 2015 and 2016 is:

The management of CIMA Engineering wants to evaluate whether value engineering has succeeded in
reducing the target manufacturing cost per unit of one of its flow controllers by 10%.Actual results for 2015 and 2016 for the flow controller are:

Required:
a.Calculate the manufacturing cost for both years.
b.Did the company achieve the target manufacturing cost per unit in 2016? Explain.

Correct Answer:

Verified

a.

b.Target for 2016 = $2,062 × 90% =...

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