Simple Costing System at Plastim Corporation

Plastim Corporation manufactures lenses for the rear taillights of automobiles. A lens, made from black, red, orange, or white plastic, is the part of the taillight visible on the automobile’s exterior. Lenses are made by injecting molten plastic into a mold, which gives the lens its desired shape. The mold is cooled to allow the molten plastic to solidify, and the lens is removed.

Plastim sells all its lenses to Giovanni Motors, a major automobile manufacturer. Under the contract, Plastim manufactures two types of lenses for Giovanni: a simple lens called S3 and a complex lens called C5. The complex lens is large and has special features, such as multicolor molding (when more than one color is injected into the mold) and a complex shape that wraps around the corner of the car. Manufacturing C5 lenses is complicated because various parts in the mold must align and fit precisely. The S3 lens is simpler to make because it has a single color and few special features.