unused capacity activity based costing activity based manageme 269249

Unused capacity, activity based costing, activity based management. 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 12,000squarefeetand Nivag is using only7O% 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?