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Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.70 23,000 units Sprockets

Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:

Direct Labor-Hours per Unit Annual Production
Hubs 0.70 23,000 units
Sprockets 0.30 57,000 units

Additional information about the company follows:

  1. Hubs require $39 in direct materials per unit, and Sprockets require $12.

  2. The direct labor wage rate is $17 per hour.

  3. Hubs require special equipment and are more complex to manufacture than Sprockets.

  4. 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) $ 22,770 115 92 207
Special processing (machine-hours) $ 164,000 4,100 0 4,100
General factory (organization-sustaining) $ 323,900 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.

Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:

Direct Labor-Hours per Unit Annual Production
Hubs 0.70 23,000 units
Sprockets 0.30 57,000 units

Additional information about the company follows:

  1. Hubs require $39 in direct materials per unit, and Sprockets require $12.

  2. The direct labor wage rate is $17 per hour.

  3. Hubs require special equipment and are more complex to manufacture than Sprockets.

  4. 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) $ 22,770 115 92 207
Special processing (machine-hours) $ 164,000 4,100 0 4,100
General factory (organization-sustaining) $ 323,900 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.

Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:

Direct Labor-Hours per Unit Annual Production
Hubs 0.70 23,000 units
Sprockets 0.30 57,000 units

Additional information about the company follows:

  1. Hubs require $39 in direct materials per unit, and Sprockets require $12.

  2. The direct labor wage rate is $17 per hour.

  3. Hubs require special equipment and are more complex to manufacture than Sprockets.

  4. 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) $ 22,770 115 92 207
Special processing (machine-hours) $ 164,000 4,100 0 4,100
General factory (organization-sustaining) $ 323,900 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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