EXERCISE 7-13 Computing ABC Product Costs LO7-3, LO7-4 Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit 0.80 0.40 Annual Hubs 10,000 units 40,000 units a. b. c. d. Additional information about the company follows: Hubs require $32 in direct materials per unit, and Sprockets require $18. The direct labor wage rate is $15 per hour. Hubs require special equipment and are more complex to manufacture than Sprockets. The ABC system has the following activity cost pools: Activity Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Cost $72.000 $816,000 Hubs Sprockets Total 400 5,000 NA 100 $200,000 5,000 NA 300 0 NA Compute the activity rate for each activity cost pool. Did you compute an activity rate for al of the activity cost pools? Why? Determine the unit product cost of each product according to the ABC system. 2