Scott Company manufactures a DVD player called Orlicon. The company sells the player to discount stores throughout the country. This player is signicantly less expensive than similar products sold by Scott's competitors, but the Orlicon offersjust DVD playback, compared with DVD and Bluray playback offered by competitor Nomad Manufacturing. Furthermore, the Orlicon has experienced production problems that have resulted in significant rework costs. Nomad '3 model has an excellent reputation for quality. As a result of the actions taken, quality has signicantly improved in 201 7 while rework and unit costs of the Orlicon have decreased. Scott has reduced manufacturing capacity because capacity is no longer needed to support rework. Scott has also lowered the Orlicon '3 selling price to gain market share and unit sales have increased. Information about the current period (2017) and last period (2016) follows. @ (Click the icon to view the information.) 0 (Click the icon to view additional information.) nnnrul lb... unn- .:_.-..M.-..-..ln Requirement 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customerservice capacity at the beginning of 2017 based on actual production and actual number of customers served in 2017. First, calculate the amount and cost of (a) unused manufacturing capacity. :x: :x: Cost of unused capacity : Data table 2016 1. Units of Orlicon produced and sold 16,000 2. Selling price $ 95 $ 3. Direct materials used (kits*) 20,000 4. Direct material cost per kit* $ 32 $ 5. Manufacturing capacity in kits processed 28,000 6. Total conversion costs $ 560,000 $ 7. Conversion cost per unit of capacity (row 6 + row 5) $ 20 $ 8. Selling and customer-service capacity 180 customers 9. Total selling and customer-service costs $ 27,000 $ 10. Selling and customer-service capacity per customer (row 9 + row 8) $ 150 $ * A kit is composed of all the major components needed to produce a DVD player. 201 7 22,000 80 22,000 32 26,000 520,000 20 180 customers 32,400 180 Data table 2016 2017 1. Units of Orlicon produced and sold 16,000 22,000 2. Selling price $ 95 $ 80 3. Direct materials used (kits*) 20,000 22,000 4. Direct material cost per kit" $ 32 $ 32 5. Manufacturing capacity in kits processed 28,000 26,000 6. Total conversion costs $ 560,000 $ 520,000 7. Conversion cost per unit of capacity (row 6 + row 5) $ 20 $ 20 8. Selling and customer-service capacity 180 customers 180 customers 9. Total selling and customer-service costs $ 27,000 $ 32,400 10. Selling and customer-service capacity per customer (row 9 -:- row 8) $ 150 $ 180 * A kit is composed of all the major components needed to produce a DVD player. Requirements 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2017 based on actual production and actual number of customers served in 2017. 2. Suppose Scott can add or reduce its selling and customer-service capacity in increments of 10 customers. What is the maximum amount of costs that Scott could save in 2017 by downsizing selling and customer-service capacity? 3. Scott, in fact, does not eliminate any of its unused selling and customer-service capacity. Why might Scott not downsize