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 70% 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: (Click the icon to view the budgeted information.) 2 (Click the icon to view other information.) Read the requirements Requirement 1. Calculate the cost per unit of cost driver for each indirect cost pool. Select the formula you will use, then calculate the cost driver rate. (Round your answers to the nearest cent. Abbreviations used: "equip." = equipment, "maint." = maintenance.) Cost Total quantity of cost driver Cost driver rate Setup (1) Equip. and Maint. = (2) Lease rent, etc. (3) Requirement 2. What is the budgeted cost of unused capacity? Select the formula you will use, then calculate the cost of unused capacity. (4) (5) Cost of unused capacity Requirement 3. What is the budgeted total cost and the cost per unit of resources used to produce (a) basketballs and (b) volleyballs? (Enter the cost per unit to the nearest cent.) Basketballs Volleyballs Total Direct materials Direct manufacturing labor Setup Equipment and maintenance Lease rent, etc. Budgeted total costs Number of units Budgeted cost per unit Requirement 4. Why might excess capacity be beneficial for Wybock? What are some of the issues Wybock should consider before increasing production to use the space? Why might excess capacity be beneficial for Wybock? (Select all that apply.) A. The excess capacity could allow for expanded production of either of the existing models. B. The company could consider adding a new product line. C. Having excess capacity allows for the company to accept special orders if they are received. D. The excess capacity is costing Wybock money and therefore, cannot be beneficial to What are some of the issues Wybock should consider before increasing production to use the space? (Select all that apply.) A. The company should consider if there is available labor and machine hours before increasing production to use the space. B. The company should considering how much they could take in rent if they opt to rent out the unused space. C. The company should consider the capital investment needed to start and support a new product line, as well as the demand for a new product. D. None of the above. 1: Data Table Wybock's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 $ 142,000 260,550 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs 110,600 97,150 120,000 103,400 Lease rent 357,000 Total $ 1,190,700 2: Data Table Other budget information follows: Basketballs Number of balls Volleyballs 95,000 59,000 Machine-hours 10,000 13,500 Number of setups Square footage of production space used 600 150 3,500 8.400 3: Requirements 1. 2. 3. Calculate the budgeted cost per unit of cost driver for each indirect cost pool. What is the budgeted cost of unused capacity? What is the budgeted total cost and the cost per unit of resources used to produce (a) basketballs and (b) volleyballs? Why might excess capacity be beneficial for Wybock? What are some of the issues Wybock should consider before increasing production to use the space? 4. (3) (1) O O per machine hour per setup per square foot (2) O O per machine hour O per setup O per square foot O per machine hour O per setup O per square foot of 3 Unused capacity Unused capacity Cost driver rate Cost Quantity of cost driver (5) O Cost driver rate Cost O Quantity of cost driver
