Refer to Exercise 14- 18.

Required
1. Calculate the amount and cost of
(a) Unused manufacturing capacity and
(b) Unused selling and customer-service capacity at the beginning of 2012 based on actual production and actual number of customers served in 2012.
2. Suppose Melissa can add or reduce its manufacturing capacity in increments of 10 units. What is the maximum amount of costs that Melissa could save in 2012 by downsizing manufacturing capacity?
3. Melissa, in fact, does not eliminate any of its unused manufacturing capacity. Why might Melissa notdownsize?

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2011 2012 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 cost per 290 $38,000 290,000 $8.25 300 $2,175,000 $7,250 5 customers 120 customers $1,164,000 $9,700 270 $36,000 285,000 $8.00 300 $2,100,000 $7,000 $1,225,000 $9,800 customer (row 9 row 8)