Wybock?'s Netballs is a manufacturer of? high-qualitybasketballs and volleyballs. Setup costs are driven by the numberof batches. Equipment and maintenance costs increase with thenumber of? machine-hours, and lease rent is paid per square foot.Capacity of the facility is 15,000 square? feet, and Wybock isusing only 60?% of this capacity. Wybock records the cost of unusedcapacity as a separate line item and not as a product cost. Thefollowing is the budgeted information for Wybock?:
| Wybock's Netballs |
| Budgeted Costs and Activities |
| For the Year Ended December 31,2017 |
| Direct material-basketballs | $ 220,660 |
| Direct material-volleyballs | 223,290 |
| Direct manufacturing labor-basketballs | 110,600 |
| Direct manufacturing labor-volleyballs | 110,250 |
| Setup | 115,500 |
| Equipment and maintenance costs | 96,600 |
| Lease rent | 180,000 |
| Total | 1,056,900 |
| Other budget information follows: |
| Basketballs | Volleyballs |
| Number of balls | 58,000 | 75,000 |
| Machine-hours | 12,000 | 11,000 |
| Number of setups | 150 | 400 |
| Square footage of production space used | 3,270 | 5,730 |
Question:
1. Calculate the budgeted cost per unit of cost driverfor each indirect cost pool.
2. What is the budgeted cost of unused?capacity?
3. What is the budgeted total cost and the cost per unitof resources used to produce? (a) basketballs and? (b)volleyballs?
4. Why might excess capacity be beneficial for Wybock??What are some of the issues Wybock should consider beforeincreasing production to use the? space?
