Question

Wybock’s Netballs is a manufacturer of high- quality basketballs and volleyballs. Setup costs are driven by the number of batches. Equipment and maintenance costs increase with the number of machine- hours, and lease rent is paid per square foot. Capacity of the facility is 17,000 square feet and Wybock is using only 80% of this capacity. Wybock records the cost of unused capacity as a separate line item, and not as a product cost. The following is the budgeted information for Wybock.

Wybock’s Netballs Budgeted Costs and Activities for the Year Ended August 31, 2013
Direct materials— basketballs.......... $ 169,180
Direct materials— volleyballs.......... 343,400
Direct manufacturing labor— basketballs...... 99,620
Direct manufacturing labor— volleyballs...... 110,250
Setup .................... 127,500
Equipment and maintenance costs .......... 110,250
Lease rent ................... 272,000
Total .................... $ 1,232,200
Other budget information follows.



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. What factors should Wybock consider if it has the opportunity to manufacture a new line offootballs?


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  • CreatedJanuary 15, 2015
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