Question
Marston Corporation makes a special-purpose machine, D4H, used in the textile industry. Marston has designed the D4H machine for 2020 to be distinct from its
Marston Corporation makes a special-purpose machine, D4H, used in the textile industry. Marston has designed the D4H machine for 2020 to be distinct from its competitors. It has been generally regarded as a superior machine. Marston presents the following data for 2019 and 2020.
Requirement 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2020 based on actual production and actual number of customers served in 2020.
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| Amount of unused capacity | Cost of unused capacity |
---|---|---|---|
(a) | Manufacturing |
|
|
(b) | Selling and customer service |
|
|
- X Data Table More Info 2019 2020 210 220 $ 36,000 $ 38,000 Marston produces no defective machines, but it wants to reduce direct materials usage per D4H machine in 2020. Conversion costs in each year depend on production capacity defined in terms of D4H units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Marston can support, not the actual number of customers it serves. Marston has 80 customers in 2019 and 85 customers in 2020. 295,000 305,000 $ 8.25 $ 8.75 275 275 1. Units of D4H produced and sold 2. Selling price 3. Direct materials (kilograms) 4. Direct material cost per kilogram 5. Manufacturing capacity in units of D4H 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. Selling and customer-service capacity per customer $ 2,117,500 $ 2,145,000 $ 7,700 $ 7,800 Print Done 120 customers 110 customers $ 1,188,000 $ 1,078,000 $ 9,900 $ 9,800
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