Question
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.50 18,000 units Sprockets
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:
| Direct Labor-Hours per Unit | Annual Production | ||
| Hubs | 0.50 | 18,000 | units |
| Sprockets | 0.10 | 55,000 | units |
Additional information about the company follows:
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Hubs require $24 in direct materials per unit, and Sprockets require $15.
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The direct labor wage rate is $19 per hour.
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Hubs require special equipment and are more complex to manufacture than Sprockets.
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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) | $ | 16,830 | 85 | 68 | 153 |
| Special processing (machine-hours) | $ | 110,000 | 4,400 | 0 | 4,400 |
| General factory (organization-sustaining) | $ | 113,500 | NA | NA | NA |
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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Ethical Obligations and Decision Making in Accounting Text and Cases
Authors: Steven M. Mintz, Roselyn E. Morris
5th edition
1259969460, 73403997, 1260480852, 978-1259969461
