Huntington Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with the number of machine hours, and indirect labor costs increase with direct labor hours. Facility rent and machine depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced, regardless of model. Currently Huntington uses 80% of its manufacturing capacity. The cost of unused capacity is not assigned to products, but is expensed as a separate line item. For 2020, Huntington has budgeted the following:

Huntington Boards
Budgeted Costs for the
Year Ended December 31, 2020
Direct materialsBasic boards	$260,000
Direct materialsCompetition boards	450,000
Direct manufacturing laborBasic boards	307,500
Direct manufacturing laborCompetition boards	512,500
Machine setup costs	90,000
Machine maintenance and utility costs	251,100
Indirect labor costs	330,000
Facility rent	254,000
Machine depreciation	63,500

Other information:

	Basic	Competition
Units produced	5,200	7,500
Machine hours	31,200	52,500
Number of setups	400	800
Direct labor-hours	15,000	25,000

Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, $X.XX. "Machine maint & util" = "Machine maintenance and utility costs".)

=

Cost driver rate

2.	Calculate the cost of unused capacity for the year.
3.	Calculate the total cost for each model, and the cost per unit for each model.
4.	Huntington has the opportunity to sublease the unused factory space to a startup company that will be manufacturing surf apparel. None of Huntington's machinery will be used. Is there a minimum annual rent that Huntington should charge? Are there any other considerations that Huntington's management should make prior to offering the space?