Question

1 Fogerty Company makes two products-Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit 0.90 0.50 Annual Production 20,000 units 52,000 units Hubs Sprockets 2 points Additional information about the company follows: a. Hubs require $31 in direct materials per unit, and Sprockets require $20. b. The direct labor wage rate is $11 per hour. c. Hubs are more complex to manufacture than Sprockets and they require special processing. d. The company's activity-based absorption costing system has the following activity cost pools: Activity Cost Pool (and Activity Measure) Machine setups (number of setups) Special processing machine-hours) General factory (Direct labor-hours) Estimated Overhead Cost 16,065 $ 117,000 $ 880,000 Hubs 85 3,900 18,000 Expected Activity Sprockets 68 0 26,000 Total 153 3,900 44,000 Required: 1. Compute the activity rate for each activity cost pool. 2. Compute the unit product cost for Hubs and Sprockets using activity-based absorption costing. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2

Answer 1

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Fogerty
Answer 1		A	B	C=A/B
Activity cost pool	Activity Measure	Cost	Activity usage	ABC rates
Machine setups	Number of setups	16,065.00	153.00	105.00
Special processing	Machine Hours	117,000.00	3,900.00	30.00
General Factory	Direct labor Hours	880,000.00	44,000.00	20.00
Total Cost assigned		1,013,065.00
Workings for Answer 2
Hubs		See C	D	E=D*C	Note
Activity cost pool	Activity Measure	ABC Rates	Activity used	Cost assigned
Machine setups	Number of setups	105.00	85.00	8,925.00
Special processing	Machine Hours	30.00	3,900.00	117,000.00
General Factory	Direct labor Hours	20.00	18,000.00	360,000.00
Total Cost assigned				485,925.00	F
Number of units				20,000.00	G
Costs per unit				24.30	H=F/G
Sprockets		See C	I	J=C*I
Activity cost pool	Activity Measure	ABC Rates	Activity used	Cost assigned
Machine setups	Number of setups	105.00	68.00	7,140.00
Special processing	Machine Hours	30.00	-	-
General Factory	Direct labor Hours	20.00	26,000.00	520,000.00
Total Cost assigned				527,140.00	K
Number of units				52,000.00	L
Costs per unit				10.14	M=K/L
Answer 2	Hubs	Sprockets	Note
Direct Materials	31.00	20.00
Direct Labor	9.90	5.50
Allocated OH per unit	24.30	10.14	See H,M
Unit product cost	65.20	35.64	R