Reference no: EM132669921
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.