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Exercise 7-13 Computing ABC Product Costs ILO7-3, LO7-41 Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-
Exercise 7-13 Computing ABC Product Costs ILO7-3, LO7-41 Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Annual Unit Production Hubs 0.80 26,000 units Sprockets 0.40 44,000 units Additional information about the company follows: a. Hubs require $28 in direct materials per unit, and Sprockets require $14. b. The direct labor wage rate is $19 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 Estimated Activity Cost Pool (Activity Measure) Overhead Cost Hubs Sprockets Total 22,680 252 Machine setups (number of setups) 140 112 o 3,600 Special processing (machine-hours) 180,000 3,600 179,200 General factory (organization-sustaining) NA NA NA Required: 1. Compute the activity rate for each activity cost pool. Activity Cost Activity Rate Pool per Machine setups setup per MH Special processing
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