The XKid manufactures an entry-level hoverboard, HOV-X. Pursuing a cost-leadership strategy, the company has tried to improve quality and reduce costs. As a result of the actions taken over the last year, quality has significantly improved in 2020 while rework and unit costs of the HOV-X have decreased. XKid has reduced manufacturing capacity because capacity is no longer needed to support rework. XKid has also lowered HOV-X's selling price to gain market share and unit sales have increased. Data table Data Table 1. Units of HOV-X produced and sold 2. Selling price 3. Direct materials used (kits) 4. Direct material cost per kit 5. Manufacturing capacity in kits processed 6. Total conversion costs 7. Conversion cost per unit of capacity (row 6+ row 5) 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. Selling and customer-service capacity per customer (row 9+ row 8) S A kit is composed of all the major components needed to produce a hoverboard S SA 2019 2020 5,000 10,000 93 $ 77 11,000 9,000 31 $ 31 16,000 13,000 256,000 $ 208,000 16 $ 16 93 customers 93 customers 15,810 $ 18,600 170 $ 200 significant capacity hy laying off omplai Print Done More info Conversion costs in each year depend on production capacity defined in terms of kits that can be processed, not the actual kits started. Selling and customer-service costs depend on the number of customers that XKid can support, not the actual number of customers it serves. XKid has 75 customers in 2019 and 82 customers in 2020. Requirement 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused seling and customer service capacity at the beginning of 2020 based on actual production and actual number of customers served in 2020 (a) Manufacturing (b) Selling and customer service Amount of Cost of unused capacity unused capacity (b) Selling and customer service Requirement 2. Suppose Xxid can add or reduce its seling and customer service capacity in increments of 10 customers, What is the maximum amount of costs that Xd could save in 2020 by downsizing selling and customer service capacity? The magmum amount of costs the company could save in 2020 by downsizing selling and customer service capacity i Requirement 3. XX, in fact, doen not eliminate any of its unused seling and customer service capacity Why might Xid not downs? Requirement 3. XXd, in fact, does not eliminate any of its unused selling and customer-service capacity. Why might XXd not downsize? Seled two statements that would explain why Xd might not downsize xd may choose not to downsure because competitors will view it as a sign of weakness if they downsize Xid may choose not to downsize because it wants to appear as though it has the capacity to produce many more units for potential customers XXd may choose not to downsize because it projects sales increases that would lead to a greater demand for and utilization of selling and customer service capacity it is difficult to reduce and then immediately increase capacity Not reducing signicant capaoty by laying off employees boosts employee morale and keeps employees more motivated and productive