Zarsons Netballs is a manufacturer of high-quality basketballs and volleyballs. Setup costs are driven by the number

Zarson’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 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:

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 Zarson? What are some of the issues Zarson should con-sider before increasing production to use thespace?

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Zarsons Netballs Budgeted Costs and Activities For the Year Ended December 31, 2014 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor- basketballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs Lease rent Total $168, 100 303,280 111,800 100,820 157,500 115,200 210,000 $1,166,700 Other budget information follows: Basketballs 58,000 13,500 Volleyballs 85,000 10,500 Number of balls Machine-hours Number of batches Square footage of production space used 450 300 3,200 8,000