Stanmore Corporation makes a specialpurpose machine D4H used

Stanmore Corporation makes a special-purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2017 to be distinct from its competitors. It has been generally regarded as a superior machine. Stanmore presents the (Click the ioon to view the data) More Info Read the requirements. 2016 2017 on actual production and actual number of Requirement 1. Calculate the amount and customers served in 2017 1. Units of D4H produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram 5. Manufacturing capacity in units of D4H 6. Total conversion costs 7. Conversion cost per unit of capacity (row 6 / row 5) 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. Selling and customer-service capacity per customer (row 9/row 8) S 210 42,000 310,000 8.50 250 S 2,000,000 S 2,025,000 8,100 100 customers 95 customers 940,500 9,900 200 40,000 S 300,000 (a) (b) Manufacturing Selling and customer service 8.00 S 250 8,000 S S 1,000,000 S 10,000 S PrintDone Enter any number in the edit fields and then

Solution

1.a. Amount and cost of unused manufacturing capacity Manufacturing capacity in units 250 Units produced and sold 210 Unused manufacturing capacity 40 Conversion cost per unit of capacity $8,100 Conversion cost of unused manufacturing capacity $324,000 1. b. Amount and cost of unused selling and customer service Selling and customer service capacity 95 Number of customers served in 2017 80 Unused selling and customer service capacity 15 Selling and customer service capacity cost per customer $9,900 Cost of unused selling and customer service capacity $148,500 2. Stanmore can reduce its manufacturing capacity from 250 units to 220 units (250-30). It cannot downsize more than this, as it produced and sold 210 units in 2017 and can further increase the production. Maximum costs that can be saved (30 x $8100) $243,000 3. Stanmore might not downsize because it projects further increase in production which require more manufacturing capacity in future. Also the downsize is in increments of 30 units, which will reduce the capacity of 30 units at one point, if he can downsize in increments of say, 10 units, may be he can choose to downsize.