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Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.70 20,000 units
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours per Unit | Annual Production | ||
Hubs | 0.70 | 20,000 | units |
Sprockets | 0.30 | 41,000 | units |
Additional information about the company follows: |
a. | Hubs require $37 in direct materials per unit, and Sprockets require $12. |
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: |
Estimated | Activity | ||||
Activity Cost Pool (Activity Measure) | Overhead Cost | Hubs | Sprockets | Total | |
Machine setups (number of setups) | $ | 27,945 | 115 | 92 | 207 |
Special processing (machine-hours) | $ | 230,000 | 4,600 | 0 | 4,600 |
General factory (organization-sustaining) | $ | 173,900 | 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. (Round intermediate calculations and final answers to 2 decimal places.) |
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