Question

son's Netballs is a manufacturer of high-quality basketballs and volleybal Setup costs are driven by the number of batches Equipment and maintenance costs increase with the number of machine hours, and rent is paid per square foot. Capacity of the facility is 16,000 square feet and Zarson is using only 80% of this capacity Zarson records the cost of unused capacity as a separatelineem and not as a product The following is the budgeted information for Zarson Click the icon to view the budgeted infomon) Click the icon to view other information) d the girements quirement 1. Caloile the cost per unit of cost driver for each indirect cost pool Select the formula you will use the calculate the cost driver rate (Round your answers to the nearest cant Abbreviations used qu'equipment, maint e nance) Cost driver rate Setup Equip and Maint Lease rente Requirement 2. What is the b ed cost of red capacity See the formula you were the cost of unused m y Cost of unused city volleyballs? (Enter the cost per un to Requirement 3. What is the budgeted total cost and the cost per unit of resources and to produce(a) basketbols and Basketball Volleyball Total Choose from any sto r y number in the mout beds and then continue to the next question ! SILEIR W

Answer 1

The solution to Requirements 1, 2 and 3 are given in the uploads below. Solution to Requirement 4 is below the upload.

Page Caleulate the cas Cost driver unil Requirenenk 1 per for cach indivect cosh poo Cost driver Toal units Cost iver To tal Cosh Cost Tate Dnver Se No. o Selups 210 per sek-up 700 ser -u 300t 400) 147,000 Equip and No ol Maint 25,sDO machine hrs u,sooti,oo0) u80 per machine hr #122,400 Machine Hours t 13peas 208,000 l6, 0.00 s4 (o07 Capachy persquate Lease Rent capacity unused dgered coat Requivement 2 Unused Capacity -Cosk unused Cost drive rate -capaily 13 per sq 3, 200 (16,000x 20, ui,600 X

Page 2 Total Cost and Cost Reguirement a Budgeted unik per used to produce (a) basketloall and resources volleyalls Tokal Basket balls Volleyballk Direct Materials Direct manulachuing Lab Setp 2.37,100 6SG800 893,900 10S,300 63,000 210x 300 a5,60 200400 84,000 (42,000 210400) Equipmdnt and Maintenance 69600 S2,200 122,400 $u80x 1,000) $124,800 13x600) Lease Rentekc $ul,600 1GE,400 3 200) OF adgehed Total Cosk s16,600 130,600 $1,a14,000 Number units 63,000 130,000 |$৪-20 unit Budeted cask pe $7.80

Requirement 4:

Why might excess capacity be beneficial for Zarson?

Answer: A: The company could consider adding a new product line, C: Having excess capacity allows the company to accept special orders if they are received and D: The excess capacity allows for expanded production of either of the existing products.

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

Answer: A, B and C