Question

Refer to the information for Scott Company in Problem 12-31.
In Problem 12-31, As a result of the actions taken, quality has significantly improved in 2013 while rework and unit costs of the Maxus have decreased. Scott has reduced manufacturing capacity because capacity is no longer needed to support rework. Scott has also lowered the Maxus’s selling price to gain market share and unit sales have increased. Information about the current period (2013) and last period (2012) follows.


1. Calculate the amount and cost of
(a) Unused manufacturing capacity
(b) Unused selling and customer-service capacity at the beginning of 2013 based on actual production and actual number of customers served in 2013.
2. Suppose Scott can add or reduce its selling and customer-service capacity in increments of five customers. What is the maximum amount of costs that Scott could save in 2013 by downsizing selling and customer- service capacity?
3. Scott, in fact, does not eliminate any of its unused selling and customer- service capacity. Why might Scott notdownsize?


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  • CreatedMay 14, 2014
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