=+6-50 KK Unused capacity, activity-based costing, activity-based management OBJECTIVES 7, 8 Advance Netballs is a manufacturer of high-quality basketballs and volleyballs. Set-up 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 metre. Capacity of the facility is 1114.8 square metres and Advance Netballs is using only 70% of this capacity. Advance Netballs records the cost of unused capacity as a separate line item, and not as a product cost. Below is the budgeted information for Advance Netballs:

258 Chapter 6: Activity-based costing and activity-based management M06_HORN3377_02_LT_C06.indd 258 2/09/13 3:26 PM Advance Netballs Budgeted costs and activities for the year ended 31 August 2013 Direct materials—basketballs $209 750 Direct materials—volleyballs 358 290 Direct manufacturing labour—basketballs 107 333 Direct manufacturing labour—volleyballs 102 969 Set-up 143 500 Equipment and maintenance costs 109 900 Lease rent 216 000 Total $1 247 742 Other information:

Basketballs Volleyballs Number of balls 66 000 100 000 Machine-hours 11 000 12 500 Number of batches 300 400 Square metres of production space used 312.1 468.2 Required 1 Calculate the cost per unit of cost driver for each indirect cost pool.