5-41 unused capacity. activity-based costing. activity-based management Archer Pro manufactures two models of sport bows. Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect manufacturing labor costs increase with direct manufacturing labor costs. Equipment and maintenance costs increase with the number of machine-hours. and facility rent is paid per square foot. Capacity of the facility is 10,000 square feet. and Archer Pro is using only ?5% of this capacity. Archer Pro records the cost of unused capacity as a sepa- rate line item and not as a product cost Forthe current year. Archer Pro has budgeted the following: Archer Pro Budgeted coats and Activities for the Year Ended December 31. 201? Direct materialsBasic bows 3 450,00] Direct materialsDeluxe bows 320ml! Direct manufacturing laborBasic bows 155,00] Direct manufacturing laborDeluxe bows $5,000 indirect manufacturing labor costs 105,00] Machine setup costs 60,001 Equipment and maintenance costs 26,000 Facility rent 250,0!\" Total 31199300 Other budget information follows: Basic Deluxe Number of bows 10.000 5.000 Machine-hours 15.000 13,000 Number of setups 500 300 Square footage of production space used 4.000 3.500 1. Calculate the cast per unit cf each caet-allccaticn base. 1 What is the budgeted cast of unused capacity? nun-u: 3. Calculate the budgeted total cost and the cost per unit for each model. 4. Whyr might excess capacity be beneficial for Archer Pro? What are some of the issues Archer Pro should consider before increasing production to use the space