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The $$Good$-$Crack$$ Company $($GCC$)$ Inc., a baseball products manufacturer, recently hired you as a management accountant in its Bat division. GCC$$s Bat division produces two products, an $$entry$-$level$$ bat made of Northern White Ash and a $$pro$-$series$$ bat made of Rock Maple wood. The production process involves turning the wood $($billets$)$ on a lathe and then sanding and finishing work to complete each bat. The entry$-$level bat comes in a standard size$/$weight and finish. The pro$-$series bat requires additional attention to procurement, quality control, and sanding and finishing work. The pro$-$series bat is sold to professional players, who visit the production facilities to discuss technical details such as weight, balance and personalization. The pro$-$series line of bats was recently introduced and GCC has been selling as many of this product as it can produce. Further expansion of the pro$-$series bat is planned; however, production personnel are not too enthusiastic about this because of the manufacturing demands placed on them by this additional product.

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In response to demands for more relevant costing information your predecessor introduced an ABC system. Two key production activities, manufacturing operations and machine setups, were identified. Production costs related to these activities are now assigned to the two lines of bats based on the cost drivers of direct manufacturing labor and setup labor hours, respectively. The old product costing system allocated all manufacturing overhead based on direct manufacturing labor hours. Your predecessor argued for a move to ABC because production runs for the pro$-$series bat take longer to setup and allocating setup costs based on setup labor hours better represents resources consumed by the two bat lines. The bat division is growing in complexity and part of your job is to manage and explain the more advanced accounting information systems used within the division.

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Your first task is to review the bat division$$s existing costing and budgeting information. To your dismay you are told that the division$$s records are in disarray and the $2024$ budget has not been compiled.$$ Since you are short on time, you decide to use the information from the last year$$s $(2023)$ records to do an initial examination of the division. These records include some budget estimates assembled before the start of $2023$ and actual information for $2023.$

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