Refer to the Grey Corporation information in Exercise 13· 18.

Required
1. Where possible, calculate the amount and cost of unused capacity for (a) manufacturing, (b) selling and customer service, and (c) design at the beginning of 2019 based on 2019 production. If you could not calculate the amount and cost of unused capacity, indicate why not.

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

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

Data from Exercise 13· 18.

Transcribed Image Text:

2018 2019 1. Units of D4H produced and sold 200 210 2. Selling price $40,000 $42,000 3. Direct materials (kilograms) 300,000 310,000 4. Direct material cost per kilogram $8.00 $8.50 5. Manufacturing capacity (units of D4H) 6. Total conversion costs 250 250 $2,025,000 $2,000,000 7. Conversion cost per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service costs $8,000 $8,100 100 customers 95 customers $940,500 $1,000,000 10. Selling and customer-service capacity cost per customer $10,000 $9,900 11. Design staff 12 12 12. Total design costs $1,200,000 $1,212,000 $101,000 13. Design cost per employee $100,000