Larman'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 Larman is using only 80% of this capacity. Larman records the cost of unused capacity as a separate line item and not as a product cost. The following is the budgeted information for Larman: Calculate the budgeted cost per unit of cost driver for each indirect cost Other budget information follows: 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? Number of balls Machine-hours Basketballs 62,000 Volleyballs 90,000 10,000 12,500 150 350 Square footage of production space used 3,250 7,950 Cost Total quantity of cost driver = Cost driver rate Why might excess capacity be beneficial for Larman? What are some of the Number of setups issues Larman should consider before increasing production to use the space? Larman's Netballs Budgeted Costs and Activities For the Year Ended December 31, 2017 Direct materials-basketballs Direct materials-volleyballs Direct manufacturing labor-basketballs Setup Equip. and Maint. $ 234,850 Lease rent, etc. 276,350 Cost Driver Quantity of 110,400 Rate x Cost Driver Volleyballs Direct manufacturing labor-volleyballs Setup Equipment and maintenance costs Lease rent 182,000 Setup $ 1,122,400 110,300 Direct materials 105,000 Direct manufacturing labor 103,500 Allocated costs: Equipment and maintenance Total Lease rent, etc. Total costs + Number of units = Cost per unit Budgeted total costs CUSI DIIVE Quantity on Basketballs S Volleyballs 498,000 + Rate Cost Driver 632.000 + Direct materials Direct manufacturing labor Allocated costs: Setup Equipment and maintenance Lease rent, etc. = Basketballs