Hetcher'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 Hetcher is using only 70% of this capacity. Hetcher records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Hetcher: Hetcher's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 Direct materials-basketballs $ 216,400 195,150 Direct materials-volleyballs Direct manufacturing labor-basketballs Direct manufacturing labor-volleyballs 110,400 97,150 Setup 195,500 Equipment and maintenance costs 90,300 264,000 Lease rent $ 1,168,900 Total Other budget information follows: Basketballs Volleyballs 80,000 Number of balls 63,000 Machine-hours 10,000 11,000 250 Number of setups 600 Square footage of production space used 3,200 5,200 1. 2. 3. Calculate the budgeted cost per unit of cost driver for each indirect cost pool. What is the budgeted cost of unused capacity? What is the budgeted total cost and the cost per unit of resources used to produce (a) basketballs and (b) volleyballs? Why might excess capacity be beneficial for Hetcher? What are some of the issues Hetcher should consider before increasing production to use the space? 4