Wybocks Netballs is a manufacturer of high- quality basketballs and volleyballs. Setup costs are driven by the

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?

Transcribed Image Text:

Basketballs 58,000 10,000 Volleyballs 110,000 14,500 Number of balls Machine-hours Number of batches Square footage of production space used 500 350 3,250 10,350