Reference no: EM132585856

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

                 Direct Labor-Hours per Unit Annual

Production Hubs          0.70         29,000units

Sprockets                   0.30      48,000units

Additional information about the company follows:

1. Hubs require $33 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.

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)                            $21,870             907                   2162

Special processing (machine-hours)                           $230,000            4,6000              4,600

General factory (organization-sustaining)                  $308,300            NA                  NANA

Required:

Question 1. Compute the activity rate for each activity cost pool.

Question 2. Determine the unit product cost of each product according to the ABC system.