Question
7. Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets Direct Labor- Hours per Unit Annual Production 0.80
7. Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets Direct Labor- Hours per Unit Annual Production 0.80 14,000 units 0.40 55,000 units Additional information about the company follows: a. Hubs require $25 in direct materials per unit, and Sprockets require $17. b. The direct labor wage rate is $15 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 Hubs Sprockets Total $ 26.460 105 84 189 $ 120,000 $385,200 4,000 0 4,000 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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