Dupper Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by Dupper's competitors. Order-processing time is very short; however, approximately 10% of products are defective and returned by the customer. Returns and refunds are handled promptly. Yedi Manufacturing, Dupper's main competitor, has a higher-priced product with almost no defects but a longer order-processing time. (Click the icon to view the additional information.) (Click the icon to view the data.) Conversion costs in each year depend on production capacity defined in terms of ZP98 units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Dupper can support, not the actual number of customers it serves. Dupper has 85 customers in 2021 and 95 customers in 2022. At the start of each year, management uses its discretion to determine the number of advertising staff for the year. Advertising staff and its costs have no direct relationship with the quantity of ZP98 units produced and sold or the number of customers who buy ZP98. Required Requirement 1. Calculate the amount and cost of unused capacity for: a. Manufacturing b. Sales and customer service c. Advertising If you are unable to calculate the amount and cost of unused capacity, explain why. Begin by calculating the amount of unused capacity for each department. Then, calculate the cost. (If it is not possible to calculate the amount or cost of unused capacity, leave the input cells blank. If any amount is zero, enter "0".) (a) Manufacturing (b) Selling and customer service (c) Advertising Amount of unused capacity Cost of unused capacity More info - Assume that in 2022, Dupper has changed its processes and trained workers to recognize quality problems and fix them before products are finished and shipped to customers. Quality is now at an acceptable level. Cost per kilogram of materials is about the same as before, but conversion costs are higher, and Dupper has raised its selling price in line with the market. Sales have increased and returns have decreased. Dupper's managers attribute this to higher quality and a price that is still less than Yedi's. Information about the current period (2022) and last period (2021) follows. Print Done Data table 2021 1a. Units of ZP98 produced and sold 5,100 2022 6,400 1b. Units of ZP98 returned 800 575 1c. Net sales in units 4,300 5,825 2. Selling price $ 47 $ 54 3. Direct materials (kilograms) used 2,500 3,200 4. Direct material cost per kilogram $ 9.25 $ 9.25 5. Manufacturing capacity in units of ZP98 9,000 9,000 6. Total conversion costs $ 108,000 $ 171,000 7. Conversion cost per unit of capacity $ 12 $ 19 8. Selling and customer-service capacity 95 customers 95 customers 9. Total selling and customer-service costs $ 4,700 $ 4,875 10. Selling and customer-service capacity cost per customer $ 49.47 $ 51.32 123 11. Advertising staff 2 2 12. Total advertising costs $ 40,000 $ 52,000 13. Advertising cost per employee $ 20,000 $ 26,000 Print Done Required I 1. Calculate the amount and cost of unused capacity for: a. Manufacturing b. Sales and customer service c. Advertising If you are unable to calculate the amount and cost of unused capacity, explain why. 2. State two reasons Dupper might downsize and two reasons it might not downsize. 3. Assume Dupper has several product lines, of which ZP98 is only one. The manager for the ZP98 product line is evaluated on the basis of manufacturing and customer sales and service costs, but not advertising costs. The manager wants to increase capacity for customers because he thinks the market is growing, and this will cost an additional $2,004. However, the manager is not going to use this extra capacity immediately, so he classifies it as advertising cost rather than customer sales and service cost. How will the deliberate misclassification of this cost affect: a. The operating income overall? b. The growth, price-recovery, and productivity components? c. The evaluation of the ZP98 manager? You are not required to calculate any numbers when answering requirement 3. Only discuss whether the misclassification will have a positive, negative, or no effect and comment on the ethics of the manager's actions. Print Done