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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 | 0.60 | 22,000 | units |
| Sprockets | 0.20 | 59,000 | units |
| |
Additional information about the company follows:
Hubs require $37 in direct materials per unit, and Sprockets require $14.
The direct labor wage rate is $13 per hour.
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) | $ | 32,625 | 145 | 116 | 261 |
| Special processing (machine-hours) | $ | 247,500 | 4,500 | 0 | 4,500 |
| General factory (organization-sustaining) | $ | 225,600 | 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.
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