Question
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.80 10,000 units
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours per Unit | Annual Production | ||
Hubs | 0.80 | 10,000 | units |
Sprockets | 0.40 | 52,000 | units |
|
Additional information about the company follows:
a. Hubs require $22 in direct materials per unit, and Sprockets require $11.
b. The direct labor wage rate is $14 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) | $ | 15,300 | 85 | 68 | 153 |
Special processing (machine-hours) | $ | 192,000 | 4,800 | 0 | 4,800 |
General factory (organization-sustaining) | $ | 257,600 | 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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