Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow: ...
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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 0.70 15,000 units Sprockets 0.30 44,000 units
Additional information about the company follows:
Hubs require $28 in direct materials per unit, and Sprockets require $11.
The direct labor wage rate is $19 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
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) $ 22,680 120 96 216 Special processing (machine-hours) $ 275,000 5,000 0 5,000 General factory (organization-sustaining) $ 234,900 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.
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:
| Direct Labor-Hours per Unit | Annual Production | ||
|---|---|---|---|
| Hubs | 0.70 | 15,000 | units |
| Sprockets | 0.30 | 44,000 | units |
Additional information about the company follows:
Hubs require $28 in direct materials per unit, and Sprockets require $11.
The direct labor wage rate is $19 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
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) | $ 22,680 | 120 | 96 | 216 |
| Special processing (machine-hours) | $ 275,000 | 5,000 | 0 | 5,000 |
| General factory (organization-sustaining) | $ 234,900 | 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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