Question

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Foresight Company manufactures binoculars. The actual costs for 2016 and 2017 were as follows:

	2016		2017
Direct materials:

	Plastic case	$ 4.00		$ 3.80
	Lens set	17.00		17.20

Direct labor	32.00	(1.6 hours)	30.00	(1.5 hours)
Indirect manufacturing costs:

	Variable	8.00		7.10
	Fixed	2.00	(50,000 units)	1.60	(60,000 units)

Beginning in 2017, Foresight implemented a continuous improvement program that required a first-year cost reduction target of a 5 percent reduction of the 2016 base.

Foresight's continuous improvement target for plastic cases in 2017 was:

Select one:

A. $4.40

B. $3.80

C. $3.72

D. $4.00

Answer 1

Answers $4 Actual cost of direct material for plastic case in 2016 = cost reduction target = 5.42016 baye : Forenight's continuous improvement trongets $40-$4x5.1.) for plastic case in 2017 = $4 -$0-2 = $3.8 option 'B' is correct Ex =