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Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours Hubs Sprockets per Unit 0.80 0.40 Annual Production
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours Hubs Sprockets per Unit 0.80 0.40 Annual Production 28,000 units 47,000 units Additional information about the company follows: a. Hubs require $29 in direct materials per unit, and Sprockets require $15. b. The direct labor wage rate is $16 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: Activity Cost Pool (Activity Measure) Estimated Overhead Activity Cost $ 20,655 Hubs 85 Sprockets 68 Total 153 $ 235,000 $ 304,400 4,700 0 4,700 Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) 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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