Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:

	Direct Labor-Hours per Unit	Annual Production
Hubs	0.70	19,000	units
Sprockets	0.30	44,000	units

Additional information about the company follows:

1. Hubs require $34 in direct materials per unit, and Sprockets require $18.

2. The direct labor wage rate is $14 per hour.

3. Hubs require special equipment and are more complex to manufacture than Sprockets.

4. The ABC system has the following activity cost pools:

	Estimated		Activity
Activity Cost Pool (Activity Measure)	Overhead Cost		Hubs	Sprockets	Total
Machine setups (number of setups)	$	22,230	130	104	234
Special processing (machine-hours)	$	166,500	3,700	0	3,700
General factory (organization-sustaining)	$	224,500	NA	NA	NA

Required:

1. Compute the activity rate for each activity cost pool.

2. Determine the unit product cost of each product according to the ABC system.

Answer rating: 100% (QA)

1 Activity Cost Pool Overhead cost Total cost drivers Activity Rate ... View the full answer