Refer to the Meredith Corporation information in Exercise 13-18.
In exercise Meredith Corporation makes a special-purpose D4H machine used in the textile industry. Meredith has designed the D4H machine for 2013 to be distinct from its competitors. It has been generally regarded as a superior machine. Meredith presents the following data for the years 2012 and 2013.

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 2013 based on 2013 production. If you could not calculate the amount and cost of unused capacity, indicate why not.
2. Suppose Meredith can add or reduce its manufacturing capacity in increments of 30 units.
What is the maximum amount of costs that Meredith could save by downsizing manufacturing capacity?
3. Meredith, in fact, does not eliminate any of its unused manufacturing capacity. Why might Meredith not downsize?

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2012 2013 210 $42,000 310,000 $8.50 250 S2,000,000 $2,025,000 $8,100 100 customers 95 customers S940,500 $9,900 12 S1,200,000 $1,212,000 S101,000 200 $40,000 300,000 $8.00 250 1. Units of D4IH produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram S. Manufacturing capacity (units of D4II) 6. Total conversion costs 7. Conversion cost per unit of capacity 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. S8,000 S1,000,000 Selling and customer-service capacity cost per customer Design staf $10,000 12 12. Total design costs 13. Design cost per employee $100,000