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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 0.60 22,000 units Sprockets

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

Direct Labor-Hours per Unit Annual Production
Hubs 0.60 22,000 units
Sprockets 0.20 51,000 units

Additional information about the company follows:

  1. Hubs require $21 in direct materials per unit, and Sprockets require $15.

  2. The direct labor wage rate is $12 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:

Activity Cost Pool (Activity Measure) Estimated Overhead Cost Activity
Hubs Sprockets Total
Machine setups (number of setups) $ 24,750 110 88 198
Special processing (machine-hours) $ 215,000 4,300 0 4,300
General factory (organization-sustaining) $ 207,000 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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