Nivag’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 12,000 square feet and Nivag is using only 80% of this capacity. Nivag records the cost of unused capacity as a separate line item, and not as a product cost. Below is the budgeted information for Nivag:

Other information:

1. Calculate the cost per unit of cost driver for each indirect cost pool.

2. What is the cost of unused capacity?

3. What is the total cost and the cost per unit of resources used to produce (a) basketballs and (b) volleyballs?

4. What factors should Nivag consider if it has the opportunity to manufacture a new line of footballs?

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Nivag's Netballs Budgeted Costs and Activities For the Year Ended August 31, 2010 $ 209,750 358,290 107,333 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs Lease rent 102,969 143,500 109,900 216,000 S1,247,742 Total Nivag's Netballs Budgeted Costs and Activities For the Year Ended August 31, 2010 $ 209,750 358,290 107,333 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs Lease rent 102,969 143,500 109,900 216,000 S1,247,742 Total