Question

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Annual per Unit Production 10,000 units 56,000 units Hubs 0.90 Sprockets 0.50 Additional information about the company follows: a. Hubs require $34 in direct materials per unit, and Sprockets require $16. 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: Activity Estimated Overhead Activity Cost Pool (Activity Measure) Machine setups (number of setups) Total Cost Hubs Sprockets 16,245 95 76 171 Special processing (machine-hours) $120,000 $177,000 4,800 4,800 General factory (organization-sustaining) 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 Compute the activity rate for each activity cost pool Activity Rate Activity Cost Pool per 95 setup Machine setups 25 per MH Special processing Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Annual Production per Unit 10,000 units 56,000 units Hubs 0.90 Sprockets 0.50 Additional Information about the company follows: a. Hubs require $34 in direct materials per unit, and Sprockets require $16. 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: Activity Estimated Overhead Activity Cost Pool (Activity Measure) Machine setups (number of setups) Cost Hubs Sprockets Total S 16,245 95 76 171 $120,000 Special processing (machine-hours) 4,800 4,800 General factory (organization -sustaining) $177,000 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 your answers to 2 decimal places.) Hubs Sprockets Direct materials Direct labor Overhead 0.00 0.00 Unit cost Required 1 Required 2

Answer 1

1) Calculate activity rate

Activity cost pool	Activity rate
Machine setup (16245/171)	95 per setup
Special processing (120000/4800)	25 per machine hour

2) Calculate unit product cost

	Hubs	Sprocket
Direct material	34	16
Direct labor	18*.90 = 16.20	18*.50 = 9
Overhead	(95*95+120000/10000) = 12.90	(76*95/56000) = 0.13
Unit cost	63.10	25.13