Question

question help for finding required #2 managerial Accounting question 4 ,

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4 Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow 25 points Direct Labor Hours per Annual Unit Production 2.90 19.000 units 0.50 47.000 units Hubs Sprockets eBook Additional information about the company follows: Print a. Hubs require $34 in direct materials per unit, and Sprockets require $20 b. The direct labor wage rate is $18 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: References Activity Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (nachine-hours) General factory (organization-sustaining) Estimated Overhead Cost $ 28,00 $120,000 $181,600 Hubs Sprockets Total 104 234 4,000 e 4.ee 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 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round new harmaa Next 4 of 4 < Prev MC Graw Hill

Answer 1

1	Calculation of Activity rates for each activity cost pool using ABC
	Activity	Costs	Activity Base		Cost Driver	Overhead Rate
	Machine Setups	$              28,000	Number of Setups		234	$              120.00
	Special Processing	$          1,20,000	Machine Hours		4000	$                30.00
	Since the activity measure for general factory is not provided in the question, no overhead is allocated to the two products, Hubs and Sprockets. Explanation: Under ABC method, costs are assigned to products based on the activity base, activity usage and activity rates. For, general factory, the information about activity base and usage are not provided in the question, hence this cost is not assigned to the two products.
2	Unit Product Cost of each product according to ABC
	Activity	Hubs	Sprockets
	Direct Material	$                34.00	$                      20.00
	Direct labour	$                16.20	$                         9.00
	Overheads	$                   7.14	$                         0.27
	Unit Cost	$                57.34	$                      29.27
	Product - Hubs
	Activity	Overhead Rate	Use of Cost Driver	Overhead Cost
	Machine Setups	$              120.00	130	$                    15,600
	Special Processing	$                30.00	4000	$                1,20,000
	Total Activity Cost			$                1,35,600
	No. of Units produced			19,000
	Activity Cost per unit			$                        7.14
	Product - Sprockets
	Activity	Overhead Rate	Use of Cost Driver	Overhead Cost
	Machine Setups	$              120.00	104	$                    12,480
	Special Processing	$                      30	0	$                             -
	Total Activity Cost			$                    12,480
	No. of Units produced			47,000
	Activity Cost per unit			$                        0.27
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