Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Hubs Sprockets 0.70 0.30 Annual Production 17,000 units 45,000 units Additional information about the company follows: a. Hubs require $29 in direct materials per unit, and Sprockets require $19. b. The direct labor wage rate is $11 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 Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: Estimated Overhead Cost $ 14,400 $ 168,000 $ 187,400 Hubs 80 4,200 NA Activity Sprockets 64 NA Total 144 4,200 NA
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Hubs Sprockets 0.70 0.30 Annual Production 17,000 units 45,000 units Additional information about the company follows: a. Hubs require $29 in direct materials per unit, and Sprockets require $19. b. The direct labor wage rate is $11 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 Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: Estimated Overhead Cost $ 14,400 $ 168,000 $ 187,400 Hubs 80 4,200 NA Activity Sprockets 64 NA Total 144 4,200 NA
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours
per Unit
Hubs
Sprockets.
0.70
0.30
Annual Production
17,000 units
45,000 units
Additional information about the company follows:
a. Hubs require $29 in direct materials per unit, and Sprockets require $19.
b. The direct labor wage rate is $11 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:
Estimated Overhead
Cost
$ 14,400
$ 168,000
$ 187,400
Activity Cost Pool (Activity Measure)
Machine setups (number of setups)
Special processing (machine-hours)
General factory (organization-sustaining)
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.
Hubs
80
4,200
NA
Activity
Sprockets
64
0
NA
Total
144
4,200
NA
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