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 22,000 units Sprockets 0.40 57,000 units Additional...

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Computation of ABC rate
Activity	OH Costs(Col 1)	No. of activity base(Col 2)	Activity Rate(Col 1 / Col 2)
Setup Costs(No. of setups)	$ 21,600	216	$ 100.00	per setup
Special Processing(Machine hours)	$ 2,53,000	4,600	$ 55.00	per machine hours
Total Cost	$ 2,74,600


		Hubs		Sprockets
	ABC rate	Activity Based usage	Cost allocated	Activity Based usage	Cost allocated
Setup Costs	$ 100.00	120	$ 12,000	96	$ 9,600
Special Processing	$ 55.00	4600	$ 2,53,000	0	$ -
Total Overhead Costs			$ 2,65,000		$ 9,600
Units Produced			22000		57000
Overhead Costs per unit			$ 12.05		$ 0.17


Calculation of Production cost per unit
	Home	Work
Direct Materials	$ 35.00	$ 12.00
Direct labor	$ 12.00	$ 6.00
Overhead Cost	$ 12.05	$ 0.17
Total Production coist per unit	$ 59.05	$ 18.17

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	Estimated		Activity
Activity Cost Pool (Activity Measure)	Overhead Cost		Hubs	Sprockets	Total
Machine setups (number of setups)	$	21,600	120	96	216
Special processing (machine-hours)	$	253,000	4,600	0	4,600
General factory (organization-sustaining)	$	222,800	NA	NA	NA

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