The XTown 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. XTown has reduced manufacturing capacity because capacity is no longer needed to support rework. XTown 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: Read Requirement 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service 2020. First, calculate the amount and cost of (a) unused manufacturing capacity. Cost of unused capacity Requirements 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. 2. Suppose XTown can add or reduce its selling and customer-service capacity in increments of 10 customers. What is the maximum amount of costs that XTown could save in 2020 by downsizing selling and customer-service capacity? 3. XTown, in fact, does not eliminate any of its unused selling and customer-service capacity. Why might XTown not downsize? X Now calculate the amount and cost of (b) unused selling and customer-service capacity. The amount of unused selling and customer-service capacity is customer-service capacity is Data t customers and the cost of unused s Requirement 2. Suppose XTown can add or reduce its selling and customer-service capacity in increments of and customer-service capacity? XTown can reduce selling and customer-service capacity by another This is the maximum amount of costs XTown can save in 2020. 1. Units of HOV-X produced and sold 2. Selling price customers. XTown will save ar 3. Direct materials used (kits*) Requirement 3. XTown, in fact, does not eliminate any of its unused selling and customer-service capacity. Why Select two statements that would explain why XTown might not downsize. Not reducing significant capacity by laying off employees boosts employee morale and keeps employees n XTown may choose not to downsize because it wants to appear as though it has the capacity to produce m 4. Direct material cost per kit 5. Manufacturing capacity in kits processed 6. Total conversion costs Print Done 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) $ A kit is composed of all the major components needed to produce a hoverboard. X 5,000 100 $ 8,000 78 14,000 9,000 $ 28 $ 16,000 352,000 $ 22 $ 28 11,000 242,000 22 S 93 customers 10,230 $ 110 $ 93 customers 17,670 190