Question
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.70 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 | 57,000 | units |
|
Additional information about the company follows:
a. Hubs require $21 in direct materials per unit, and Sprockets require $11.
b. The direct labor wage rate is $17 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) | $ | 14,580 | 90 | 72 | 162 |
Special processing (machine-hours) | $ | 175,500 | 3,900 | 0 | 3,900 |
General factory (organization-sustaining) | $ | 236,300 | NA | NA | NA |
|
Required:
1. Compute the activity rate for each activity cost pool.
Machine Setups per setup
Special processing per MH
2. Determine the unit product cost of each product according to the ABC system. (Round intermediate calculations and final answers to 2 decimal places.)
For Hubs and Sprockets
Direct Materials
Direct Labor
Overhead
Unit Cost
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started