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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 0.70 0.30 Annual Production 25,000
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Hubs Sprockets Unit 0.70 0.30 Annual Production 25,000 units 43,000 units Additional information about the company follows: a. Hubs require $29 in direct materials per unit, and Sprockets require $12. b. The direct labor wage rate is $12 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 Hubs $ 18,630 $ 166,500 90 3,700 Activity Sprockets 72 Total $ 107,800 BON NA 162 3,700 NA 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
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