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Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: Additional information about the company follows: Hubs require $22 in direct
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:
Additional information about the company follows:
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Hubs require $22 in direct materials per unit, and Sprockets require $18.
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The direct labor wage rate is $16 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:
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.
Direct Labor- Hours per Annual Unit Production 0.60 13,000 units 0.20 58,000 units Hubs Sprockets Activity Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Estimated Overhead Cost $ 27,000 $ 80,000 $123,800 Hubs 150 4,000 NA Sprockets Total 120 270 0 4,000 NA NA Compute the activity rate for each activity cost pool. Activity Cost Pool Machine setups Special processing Activity Rate per setup per MH Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Hubs Sprockets Direct materials Direct labor Overhead Unit costStep by Step Solution
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