Zarson's Netballs is a manufacturer of high- quality basketballs and volleyballs. Setup costs are driven by...
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Zarson's Netballs is a manufacturer of high- quality basketballs and volleyballs. Setup costs are driven by the number of setups. Equipment and maintenance costs increase with the number of machine-hours, and lease rent is paid per square foot. Capacity of the facility is 14,000 square feet, and Zarson is using only 80% of this capacity. Zarson records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Zarson: Zarson's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs $ 168,100 303,280 111,800 100,820 157,500 115,200 Lease rent 210,000 S1,166,700 Total Other budget information follows: Basketballs 58,000 Volleyballs 85,000 10,500 Number of balls Machine-hours 13,500 Number of setups Square footage of production space used 450 300 3,200 8,000 Required 1. Calculate the budgeted cost per unit of cost driver for each indirect cost pool. 2. What is the budgeted cost of unused capacity? 3. What is the budgeted total cost and the cost per unit of resources used to produce + (a) basketballs and (b) volleyballs? 4. Why might excess capacity be beneficial for Zarson? What are some of the issues Zarson should consider before increasing production to use the space? Zarson's Netballs is a manufacturer of high- quality basketballs and volleyballs. Setup costs are driven by the number of setups. Equipment and maintenance costs increase with the number of machine-hours, and lease rent is paid per square foot. Capacity of the facility is 14,000 square feet, and Zarson is using only 80% of this capacity. Zarson records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Zarson: Zarson's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs $ 168,100 303,280 111,800 100,820 157,500 115,200 Lease rent 210,000 S1,166,700 Total Other budget information follows: Basketballs 58,000 Volleyballs 85,000 10,500 Number of balls Machine-hours 13,500 Number of setups Square footage of production space used 450 300 3,200 8,000 Required 1. Calculate the budgeted cost per unit of cost driver for each indirect cost pool. 2. What is the budgeted cost of unused capacity? 3. What is the budgeted total cost and the cost per unit of resources used to produce + (a) basketballs and (b) volleyballs? 4. Why might excess capacity be beneficial for Zarson? What are some of the issues Zarson should consider before increasing production to use the space?
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1 a Set up cost 157500 Total No of set ups 750 Cost per set up 210 b Equipment Ma... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
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