Question

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Annual Unit Production 0.90 15,000 units 0.50 52,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $32 in direct materials per unit, and Sprockets require $17. b. The direct labor wage rate is $16 per hour. c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing machine-hours) General factory (organization-sustaining) Estimated Overhead Cost $ 23,400 $220,000 $507,500 Hubs Sprockets Total 130 104 234 4,400 0 4,400 ΝΑ ΝΑ ΝΑ

Answer 1

Activity Cost Pool Machin Setup =(23400/234) Special Processing (220000/4400) $ $ Activity Rate 100 Per Setup 50 Per MH Hubs Total Ovehead Cost Assigned Machine Setup (Rate * setups) Special Processing (Rate* Machine Hours) Total Oveheads Ovehead cost per unit (Ov/ Units) =(233000/15000),(10400/52000) Sprockets 13000 10400 220000 233000 10400 15.53 0.20 Determine the Unit Product Cost Hubs Sprockets Direct Material 32.00 17.00 The Direct labor(16*0.9)(16*0.50) 14.40 8.00 Overhead cost 15.53 0.20 Unit Cost 61.93 25.20