Product Costing BatsRUs, Inc., has created a unique line of aluminum baseball bats that, while illegal for league use, are designed to nearly double the average length of a batted ball. They are a great “hit” in the personal and family use market. Recently, a new competitor, Awesome Bats, Inc., has introduced a competing bat to the market. Suddenly, BatsRUs is experiencing severe market pressure to significantly lower its normal market price of $175. The problem is that management is not very confident about the actual production cost per bat. With some effort, the following data have been developed for management to use in setting a new market price and, more importantly, beginning an effort to better control costs.

1. What appears to be the average cost for BatsRUs to manufacture a single baseball bat?
2. Do you have any questions or concerns about how the data are being used to determine the cost of manufacturing a baseball bat at BatsRUs?

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Standard Variable Costs to Produce One Batch of 10 Bats (600 batches are typically produced each week) Average Pounds per Batch Total Costs Direct materials Direct labor Variable manufacturing overhead Total variable costs Manufacturing overhead Sales and administrative costs Total fixed costs Average Cost per Pound $ 3 16 $ 48 Average Rate per Hour Average Hours per Batch $15 20 22 30 40 $118 Standard Weekly Fixed Costs $240,000 180,000 $420,000