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

10,000

square feet, and

Wybock

is using only

60%

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 December 31, 2017
Direct materialsbasketballs	$186,200
Direct materialsvolleyballs	461,500
Direct manufacturing laborbasketballs	110,600
Direct manufacturing laborvolleyballs	96,200
Setup	110,500
Equipment and maintenance costs	91,200
Lease rent	150,000
Total	$1,206,200

Other budget information follows: Basketballs Volleyballs Number of balls 56,000 110,000 Machine-hours 11,000 13,000 Number of setups 250 400 Square footage of production space used 3,340 2,660

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 ? What are some of the issues should consider before increasing production to use the space?