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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Unit 0.70 0.30 Hubs Sprockets Annual Production
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Unit 0.70 0.30 Hubs Sprockets Annual Production 21,000 units 56,000 units Additional information about the company follows a. Hubs require $34 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 processing d. The company's activity-based absorption costing system has the following activity cost pools Expected Activit Sprockets Estimated Activity Cost Pool (and Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (Direct labor-hours) Overhead Cost Hubs Total 252 3,500 31,500 $ 22,680 $ 157, 500 $ 472,500 14,700 140 3,500 112 16,800 Required 1. Compute the activity rate for each activity cost pool 2. Compute the unit product cost for Hubs and Sprockets using activity-based absorption costing
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