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.
Set Ups $ 600
Machining $ 7,500
Receiving $ 3,000