Daniel is a baseball player at Queens and his baseball gloves typically need to be replaced every two years. We see a gap in the market for baseball gloves made of a material that will last longer than two years.

Company Name: Not Your Average Baseball

Proposed Service/Product: Baseballs made ‌of long-lasting leather

Background On Our Decision:

Company Organizational Structure:

1. Product Divisions

   1. Leather

   2. Stitching

   3. Yarn

2. Functional Divisions

   1. Marketing

   2. Product Innovation (uses technology)

Why we Divided the Company in this manner:

For the product divisions, we chose the divisions based on the materials needed. For functional divisions, we want to set ourselves apart from other baseball manufacturers and want to market in a high-tech way to drive the sales of baseballs. We chose product innovation to ensure we have a distinct competitive advantage.

Thoughts on Cost Structure

We are going to manufacture our own leather, and yarn based on our research and technology to create durable baseballs. Since this will be made in-house, these costs would be variable. We will also have variable costs including salaries for the labor and the salaries of our product innovation division.

QUESTIONS BELOW:

Create a professional report that provides the first two years of budgeted annual financial statements for your proposed business idea. These need to be presented on both a division and consolidated basis.

1. What are your cost drivers?
2. What cost method will you use for each product? Why?
3. Describe your direct and indirect costs, including amounts. Tell the reader which costs are fixed and which are variable.
4. How are you assigning overhead to each product?
5. Are there potential issues or distortions for each unit/product based on the way you are assigning overhead? 
6. Do you need to allocate costs/revenue between units? If so, how much and why? 
7. What would be your unit product cost? What would be your proposed selling price?
8. Prepare two annual (e.g., 2022 & 2023) budgeted income statements. Use the contribution approach. Do not include start-up costs.
9. Prepare a cost-volume-profit analysis of your products (what would be the breakeven point?)