Read Nike’s 10-K Item 1 description of its business. Although Nike does not manufacture the products it sells, its subsidiaries do some manufacturing. For example, Nike’s subsidiary, Umbro, headquartered in Cheadle, England, manufactures and distributes soccer equipment and clothing.
1. What kinds of sports gear does Umbro make? Consider the Umbro plant that makes soccer clothing. List five variable-cost resources and five fixed-cost resources that are part of the plant’s overhead.
2. Suppose that Umbro uses a dedicated production line to make only soccer shoes. What are some resources that are normally part of overhead that would be directly traceable to the soccer-shoe cost object?