Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-...
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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Annual Unit Production Hubs Sprockets 0.60 12,000 units 0.20 46,000 units Additional information about the company follows: a. Hubs require $39 in direct materials per unit, and Sprockets require $14. b. The direct labor wage rate is $10 per hour. c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Estimated Activity Overhead Cost $ 20,520 Hubs Sprockets Total 120 96 216 $154,000 4,400 0 4,400 $ 62,400 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. Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Annual Unit Production Hubs Sprockets 0.60 12,000 units 0.20 46,000 units Additional information about the company follows: a. Hubs require $39 in direct materials per unit, and Sprockets require $14. b. The direct labor wage rate is $10 per hour. c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Estimated Activity Overhead Cost $ 20,520 Hubs Sprockets Total 120 96 216 $154,000 4,400 0 4,400 $ 62,400 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.
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