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Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:    Direct Labor-Hours per...

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Accounting

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

  

Direct
Labor-Hours per Unit		Annual
Production
Hubs0.6018,000units
Sprockets0.2051,000units

Additional information about the company follows:

a. Hubs require $34 in direct materials per unit, and Sprocketsrequire $18.

b. The direct labor wage rate is $17 per hour.

c. Hubs are more complex to manufacture than Sprockets and theyrequire special equipment.

d. The ABC system has the following activity cost pools:

  

EstimatedActivity
Activity Cost Pool (Activity Measure)Overhead CostHubsSprocketsTotal
Machine setups (number of setups)$15,3008568153
Special processing (machine-hours)$184,5004,10004,100
General factory (organization-sustaining)$174,000NANANA

Required

2. Determine the unit product cost of each product according tothe ABC system. (Round intermediate calculations and finalanswers to 2 decimal places.)

For hubs and sprockets

Direct materials:

Direct Labor:

Overhead:

Answer & Explanation Solved by verified expert
4.0 Ratings (446 Votes)

Requirement 2, along with workings

Hubs Sprockets
Answer Working Answer Working
Direct materials $                34.00 [given] $            18.00 [given]
Direct labor $                10.20 0.60 DLHs x $ 17 $              3.40 0.20 DLHs x $ 17
Overhead $                10.72 [ (85 x 100) + (4100 x 45)]/18000 units $              0.13 [ (68 x 100) + (0 x 45)]/51000 units
Unit cost $                54.92 $            21.53

--ABC workings

Activity Cost Pool Overhead cost Total Activity Activity Rate
[A] [B] [C = A/B]
Machine setups $15,300 153 $100.000 per setup
Special processing $184,500 4100 $45.00 per MH
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