EXERCISE 2A-1 Activity-Based Absorption Costing LO2-5 Fogerty Company makes two products-Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets. Direct Labor-Hours per Unit Annual Production 0.80 10,000 units 0.40 40,000 units Additional information about the company follows: a. b. C. Hubs require $32 in direct materials per unit, and Sprockets require $18. The direct labor wage rate is $15 per hour. Hubs are more complex to manufacture than Sprockets and they require special processing. d. The company's activity-based absorption costing system has the following activity cost pools: Activity Cost Pool (and Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (Direct labor-hours) Expected Activity Estimated Overhead Cost Hubs Sprockets Total $72,000 100 300 400 $200,000 5,000 0 5,000 $816,000 8,000 16,000 24,000 Required: 1. Compute the activity rate for each activity cost pool. 2. Compute the unit product cost for Hubs and Sprockets using activity-based absorption costing.