Zarson records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Zarson: Zarson's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 Direct materials–basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volloyballs Setup Equipment and maintenance costs $ 168,100 303,280 111,800 100,820 157,500 115,200 210,000 $1,166,700 Lease rent Total Other budget information follows: TT Basketballs Volleyballs 85,000 Number of balls 58,000 Machine-hours 13,500 10,500 Number of setups Square footage of production space used 450 300 3,200 8,000
Zarson records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Zarson: Zarson's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 Direct materials–basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volloyballs Setup Equipment and maintenance costs $ 168,100 303,280 111,800 100,820 157,500 115,200 210,000 $1,166,700 Lease rent Total Other budget information follows: TT Basketballs Volleyballs 85,000 Number of balls 58,000 Machine-hours 13,500 10,500 Number of setups Square footage of production space used 450 300 3,200 8,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Zarson’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 14,000 square feet, and Zarson is using only 80% of this capacity. Required. Zarson records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Zarson:(RESOURCE IN PICTURE ATTATCHED)
Q.What is the budgeted cost of unused capacity?
Transcribed Image Text:Zarson records the cost of unused capacity as a separate line item and not as a product cost. The following
is the budgeted information for Zarson:
Zarson's Netballs
Budgeted Costs and Activities
For the Year Ended December 31, 2017
Direct materials–basketballs
Direct materials-volleyballs
Direct manufacturing labor-basketballs
Direct manufacturing labor-volloyballs
Setup
Equipment and maintenance costs
$ 168,100
303,280
111,800
100,820
157,500
115,200
210,000
$1,166,700
Lease rent
Total
Other budget information follows:
TT
Basketballs
Volleyballs
85,000
Number of balls
58,000
Machine-hours
13,500
10,500
Number of setups
Square footage of production space used
450
300
3,200
8,000
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