Question
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.70 19,000 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 | 19,000 | units |
| Sprockets | 0.30 | 44,000 | units |
Additional information about the company follows:
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Hubs require $34 in direct materials per unit, and Sprockets require $18.
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The direct labor wage rate is $14 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) | $ | 22,230 | 130 | 104 | 234 |
| Special processing (machine-hours) | $ | 166,500 | 3,700 | 0 | 3,700 |
| General factory (organization-sustaining) | $ | 224,500 | 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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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
978-0470317549, 9780470387085, 047031754X, 470387084, 978-0470533475
