MBA Semester 1 Exam Part II – Scenario Analysis

Baseball Products, Inc.

You are the new production manager of a small manufacturing company, Baseball Products, Inc., which is located in Littletown, Montana. Your company manufactures two primary products: baseball bats and baseball gloves. You have decided to implement ABC Costing to allocate overhead costs associated with these products.

Your task is to design an ABC report to present to management.  Be sure to show an allocation of the overhead cost to Bats and Gloves and proof that you did the allocation correctly.

You ask the manufacturing supervisor for the necessary data to apply ABC Costing. You are provided with the following information.

 The activities involved with manufacturing the bats and gloves in a week include the following.

Activity                                   Bats                             Gloves

Set-Ups                                       2                                  4

Machining                               150 hours                   350 hours

Receiving                                  30 receipts                   70 receipts

Packing                                   250 deliveries              550 deliveries

Engineering                             400 hours                    600 hours

            The overhead costs per activity are as follows in a week.

Activity                                   Cost

Set Ups                                   $     600

Machining                               $  7,500

Receiving                                $  3,000

Packing                                   $16,000

Engineering                             $22,000

Total                                        $49,100