Foul Ball Called in Error

[NY87]

Hi - my first post here. Looking some advice on how we could have handled this one better. I am the base umpire, AAU game using FED rules.

2 outs, R1, 1-1 count on RH batter: pitch is way inside and I see/hear it hit the knob end of the bat, ball rolls towards me in B. PU immediately yells "foul", batter remains in box. Pitcher fields ball, and starts to play to first - I echo foul call.

Offense immediately wants to know why foul was called, shouts out "the ball hit the bat".

My partner comes out to talk to me. I tell him what I saw. He tells me "I heard it hit something".

Is it best to admit the foul ball call was wrong, or tell them the ball hit the bat, then the batter. Or something else.

BTW: my partner kept the batter at bat with another strike; 2 pitches later batter grounded out.