Clinton Corp. is a manufacturer of equipment used in motorcycles production. It currently produces a product...

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Clinton Corp. is a manufacturer of equipment used in motorcycles production. It currently produces a product with 15 parts but through redesign has reduced the number of parts to 5. Then current activity capacity and demand for the 15 part configuration and expected activity demand for the 5 part configuration are provided below: Activities Current Expected Activity Driver Activity Capacity Activity Demand Activity Demand Materials usage number of parts 300,000 300,000 100,000 direct labor Assembly 10,000 10,000 4,000 hours number of Purchasing parts 10,000 8,000 6,000 orders per Materials usage has a rate of $4 per part and no fixed costs. Assembly has a rate of $15 labor hour with no fixed component. Purchasing requires clerks that can process 5000 purchase orders. Each clerk earns $35,000 per year. There is also a $2 per order processing cost. The product sells for $45 and 50,000 units will be produced. Required: 1. What is the total cost savings from the new design? 2. What is the new sales price if the cost savings are passed on to the customer? Clinton Corp. is a manufacturer of equipment used in motorcycles production. It currently produces a product with 15 parts but through redesign has reduced the number of parts to 5. Then current activity capacity and demand for the 15 part configuration and expected activity demand for the 5 part configuration are provided below: Activities Current Expected Activity Driver Activity Capacity Activity Demand Activity Demand Materials usage number of parts 300,000 300,000 100,000 direct labor Assembly 10,000 10,000 4,000 hours number of Purchasing parts 10,000 8,000 6,000 orders per Materials usage has a rate of $4 per part and no fixed costs. Assembly has a rate of $15 labor hour with no fixed component. Purchasing requires clerks that can process 5000 purchase orders. Each clerk earns $35,000 per year. There is also a $2 per order processing cost. The product sells for $45 and 50,000 units will be produced. Required: 1. What is the total cost savings from the new design? 2. What is the new sales price if the cost savings are passed on to the customer?