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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Hubs Sprockets Unit 0.60 0.20 Annual Production 13,000
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Hubs Sprockets Unit 0.60 0.20 Annual Production 13,000 units 52,000 units Additional information about the company follows: a. Hubs require $23 in direct materials per unit, and Sprockets require $11. b. The direct labor wage rate is $18 per hour. c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Cost Pool (Activity Measure) Estimated Overhead Cost $10,420 $ 198,000 $101,400 Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) 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 Activity Hubs Sprockets 130 104 3,600 0 NA NA Total 234 3,600 NA
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