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. 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 $ 168,100 Direct materials—volleyballs 303,280 Direct manufacturing labor—basketballs 111,800 Direct manufacturing labor—volleyballs 100,820 Setup 157,500 Equipment and maintenance costs 115,200 Lease rent 210,000 Total $1,166,700Other budget information follows: Basketballs Volleyballs Number of balls 58,000 85,000 Machine-hours 13,500 10,500 Number of setups 450 300 Square footage of production space used 3,200 8,000 Q.What is the budgeted cost of unused capacity?
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. 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 $ 168,100
Direct materials—volleyballs 303,280
Direct manufacturing labor—basketballs 111,800
Direct manufacturing labor—volleyballs 100,820
Setup 157,500 Equipment and maintenance costs 115,200
Lease rent 210,000
Total $1,166,700
Other budget information follows:
Basketballs Volleyballs Number of balls 58,000 85,000 Machine-hours 13,500 10,500 Number of setups 450 300 Square footage of production space used 3,200 8,000
Q.What is the budgeted cost of unused capacity?
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