Homework - Problem 2 - Computing Product Cost Lutz Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours Per Unit Annual Production Hubs 0.70 10,000 Units Sprockets 0.50 40,000 Units Additional information about the company follows: a. Hubs require $28 in direct materials per unit, and Sprockets require $16. b. The direct labor wage rate is $20 per hour. c. Hubs are more complex to manufacture than Sprockets and they require special equipment d. The ABC System has the following activity cost pools: Activity Cost Pool (Activity Measure) Estimated Activity Overhead Cost Hubs Sprockets Total Machine setups (number of setups) $68,000 100 300 400 Special processing (machine-hours) $250,000 5,000 0 5,000 Gencral factory (organization-sustaining) $816,000 NA NA NA Required: 1. Compute the activity rate for each cost pool. Did you compute an activity rate for all of the activity cost pools? Why? 2. Determine the unit product cost of each product according to the ABC system