The Xlevel 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. Xlevel has reduced manufacturing capacity because capacity is no longer needed to support rework. Xlevel has also lowered HOV-X's selling price to gain market share and unit sales have increased Information about the current period (2020) and last period (2019) follows (Click the icon to view the information.) (Click the icon to view additional information.) Read the requirements 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. (a) Manufacturing (b) Selling and customer service Amount of Cost of unused capacity unused capacity Requirement 2. Suppose Xlevel can add or reduce its selling and customer-service capacity in increments of 10 customers. What is the maximum amount of costs that Xlevel could save in 2020 by downsizing selling and customer-service capacity? The maximum amount of costs the company could save in 2020 by downsizing selling and customer-service capacity is Requirement 3. Xlevel in fact does not eliminate any of its unused sellino and customer-service capacity Why might Xlevel not downsize? Requirement 3. Xlevel, in fact, does not eliminate any of its unused selling and customer-service capacity Why might Xlevel not downsize? Select two statements that would explain why Xlevel might not downsize Xlevel may choose not to downsize because competitors will view it as a sign of weakness if they downsize Xlevel may choose not to downsize because it wants to appear as though it has the capacity to produce many more units for potential customers Xlevel 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 can difficult to reduce and then immediately increase capacity Not reducing significant capacity by laying off employees boosts employee morale and keeps employees more motivated and productive 2019 2020 1. Units of HOV-X produced and sold 2. Selling price 3. Direct materials used (kits) 4. Direct material cost per kit 4,000 8,000 99 $ 83 5,000 7,000 34 $ 34 5. Manufacturing capacity in kits processed 17,000 11,000 6. Total conversion costs 323,000 $ 209,000 7. Conversion cost per unit of capacity (row 6+ row 5) $ 19 $ 19 8. Selling and customer-service capacity 95 customers. 95 customers 9. Total selling and customer-service costs $ 17,100 $ 21,850 10. Selling and customer-service capacity per customer (row 9+ row 8) $ A kit is composed of all the major components needed to produce a hoverboard. 180 $ 230 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 Xlevel can support, not the actual number of customers it serves. Xlevel has 75 customers in 2019 and 82 customers in 2020. ers. W level na Print Done e units f d utilizat