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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Hubs 0.70 Annual Production 23,000 units
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Hubs 0.70 Annual Production 23,000 units 57,000 units Sprockets 0.30 Additional information about the company follows: a. Hubs require $35 in direct materials per unit, and Sprockets require $12. b. The direct labor wage rate is $11 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: Estimated Overhead Cost Hubs Activity Cost Pool (Activity Measure) Machine setups (number of setups) 145 $ 24,795 $ 164,000 Special processing (machine-hours) 4,100 General factory (organization-sustaining) $ 187,100 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 Sprockets 116 0 Total 261 4,100
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