Exercise 7-13 (Static) 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	0.80	10,000	units
Sprockets	0.40	40,000	units

Additional information about the company follows:

1. Hubs require $32 in direct materials per unit, and Sprockets require $18.

2. The direct labor wage rate is $15 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:

	Estimated		Activity
Activity Cost Pool (Activity Measure)	Overhead Cost		Hubs	Sprockets	Total
Machine setups (number of setups)	$	72,000	100	300	400
Special processing (machine-hours)	$	200,000	5,000	0	5,000
General factory (organization-sustaining)	$	816,000	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.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each activity cost pool. Activity Cost Pool Machine setups Special processing Activity Rate per $ 1801 setup $ 40 per MH Complete this question by entering your answers in the tabs below. 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 $ 0.00 $ 0.00