**Prector's Netballs: Budgeted Costs and Activities for the Year Ended December 31, 2020** **Data Table** **Costs:** - **Direct Materials** - Basketballs: $251,500 - Volleyballs: $201,050 - **Direct Manufacturing Labor** - Basketballs: $108,700 - Volleyballs: $97,150 - **Other Costs** - Setup: $68,000 - Equipment and Maintenance: $105,600 - Lease Rent: $320,000 - **Total Cost:** $1,152,000 **Budget Information** - **Basketballs** - Number of Balls: 59,000 - Machine-hours: 10,500 - Number of Setups: 150 - Square Footage of Production Space Used: 3,270 - **Volleyballs** - Number of Balls: 85,000 - Machine-hours: 11,500 - Number of Setups: 250 - Square Footage of Production Space Used: 9,530 **Requirements:** 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 Prector? What are some of the issues Prector should consider before increasing production to use the space? # Chapter 5 - Homework ## Prector's Netballs Case Study Prector's Netballs is a manufacturer of high-quality basketballs and volleyballs. Setup costs are driven by the number of setups. Equipment and maintenance costs increase with the number of machine-hours, and lease rent is paid per square foot. Capacity of the facility is 16,000 square feet, and Prector is using only 80% of this capacity. Prector records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Prector: - **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.) ``` Setup (1) + (2) = Cost driver rate Equip. and Maint. (3) Lease rent, etc. (4) ――――――――――――――――――――――――― (5) ``` - **Requirement 2:** What is the budgeted cost of unused capacity? - Select the formula you will use, then calculate the cost of unused capacity. ``` (6) x (7) = 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 Prector? What are some of the issues Prector should consider before increasing production