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Compute the activity rate for each activity cost pool

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Question - Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:

Direct Labor-Hours per Unit Annual Production

Hubs 0.80 23,000 units

Sprockets 0.40 42,000 units

Additional information about the company follows:

a. Hubs require $39 in direct materials per unit, and Sprockets require $16.

b. The direct labor wage rate is $18 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:

Estimated Activity Activity Cost Pool (Activity Measure) Overhead Cost

Hubs Sprockets Total

Machine setups (number of setups) $31,320 145 116 261

Special processing (machine-hours) $264,000 4,800 0 4,800

General factory (organization-sustaining) $169,600 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.

Reference no: EM132669921

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