Exercise 7-13 (Algo) Computing ABC Product Costs [LO7-3, LO7-4]

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

	Direct Labor-Hours per Unit	Annual Production
Hubs	0.90	27,000	units
Sprockets	0.50	42,000	units

Additional information about the company follows:

1. Hubs require $23 in direct materials per unit, and Sprockets require $11.

2. The direct labor wage rate is $13 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:

Activity Cost Pool (Activity Measure)	Estimated Overhead Cost	Activity
		Hubs	Sprockets	Total
Machine setups (number of setups)	$ 27,945	115	92	207
Special processing (machine-hours)	$ 147,000	4,200	0	4,200
General factory (organization-sustaining)	$ 339,300	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.

Required 1 Required 2 Compute the activity rate for each activity cost pool, Activity Cost Pool Activity Rate Machine setups per setup Special processing per MH Required 1 Required 2 Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Hubs Sprockets Direct materials Direct labor Overhead Unit cost