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CoursHeroTranscribedText: Units of SPX 1000 produced and sold 50,000 55,000 Selling price $40 $46 Direct materials (kilograms) 150,000 151,625 Direct materials costs per kilogram $6.00

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CoursHeroTranscribedText: Units of SPX 1000 produced and sold 50,000 55,000 Selling price $40 $46 Direct materials (kilograms) 150,000 151,625 Direct materials costs per kilogram $6.00 $6.50 Manufacturing capacity for SPX 1000 (units) 70,000 70,000 Total manufacturing conversion costs $560,000 $630,000 Manufacturing conversion costs per unit of capacity $8.00 $9.00 Selling and customer-service capacity (customers) 33 31 Total selling and customer-service costs $297,000 $294,500 Cost per customer of selling & customer-service capacity $9,000 $9,500 Calculate Inc. produces no defective units but it wants to reduce direct materials usage per unit of SPX 1000 in year 2. Manufacturing conversion costs in each year depend on production capacity defined in terms of SPX 1000 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Neither conversion costs or customer-service costs are affected by changes in actual volume. Calculate Inc. has 23 customers in year 1 and 25 customers in year 2. The industry market size for hand held calculators increased 5% from year 1 to year 2. Of the $6 increase in unit selling price, $2 is due to a general increase in prices

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