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Category > Accounting Posted 25 Sep 2017 My Price 9.00

manufacturing capacity

Identifying and managing unused capacity.

1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2011 based on actual production and actual number of customers served in 2011.

2. Suppose Stanmore can add or reduce its manufacturing capacity in increments of 30 units. What is the maximum amount of costs that Stanmore could save in 2011 by downsizing manufacturing capacity?

3. Stanmore, in fact, does not eliminate any of its unused manufacturing capacity. Why might Stanmore not downsize?

   

2010

2011
 

Units of D4H produced and sold

200

210
 

Selling price

$40,000

$42,000
 

Direct materials (kilograms)

300,000

310,000
 

Direct material cost per kilogram

$8

$8.50
 

Manufacturing capacity in units of D4H

250

250
 

Total conversion costs

$2,000,000

$2,025,000
 

Conversion cost per unit of capacity (row 6 ÷ row 5)

$8,000

$8,100
 

Selling and customer-service capacity

100 customers

95 customers
 

Total selling and customer-service costs

$1,000,000

$940,500
 

Selling and customer-service capacity cost per customer(row 9 ÷ row 8)

$10,000

$9,900

 

Answers

Maurice Tutor
(5)
Status NEW Posted 25 Sep 2017 03:09 PM My Price 9.00

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