QUESTION 2Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:Direct Labor-Hours per Unit Annual Production0.8013,00051,000HubsSprockets 0.40Additional information about the company follows:unitsunits1. Hubs require $28 in direct materials per unit, and Sprockets require $12.2. The direct labor wage rate is $12 per hour.3. Hubs require special equipment and are more complex to manufacture than Sprockets.4. The ABC system has the following activity cost pools:Activity Cost Pool (Activity Measure)Machine setups (number of setups)Special processing (machine-hours)General factory (organization-sustaining)Estimated Overhead Cost$ 33,930$ 264,000$ 398,000Required:1. Compute the activity rate for each activity cost pool.2. Determine the unit product cost of each product according to the ABC system.For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).BIUSParagraphArial10pt111<!!!ActivityHubs Sprockets145 1164,800 0ΝΑNA>ען<Total2614,800ΝΑI.g

Lets understand the basics. Acitivity rate is calculated to allocate the overhead cost to actual…

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production 0.80 13,000 units 51,000 units Hubs Sprockets 0.40 Additional information about the company follows: 1. Hubs require $28 in direct materials per unit, and Sprockets require $12. 2. The direct labor wage rate is $12 per hour. 3. Hubs require special equipment and are more complex to manufacture than Sprockets. 4. The ABC system has the following activity cost pools:

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production 0.80 13,000 units 51,000 units Hubs Sprockets 0.40 Additional information about the company follows: 1. Hubs require $28 in direct materials per unit, and Sprockets require $12. 2. The direct labor wage rate is $12 per hour. 3. Hubs require special equipment and are more complex to manufacture than Sprockets. 4. The ABC system has the following activity cost pools:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Hubs Sprockets Unit 0.50 0.10 Annual Production 13,000 units 41,000 units Additional information about the company follows: a. Hubs require $35 in direct materials per unit, and Sprockets require $14. b. The direct labor wage rate is $10 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: 1. Compute the activity rate for each activity cost pool. Estimated Overhead Activity Cost Hubs $ 20,790 105 Sprockets 84 Total $ 200,000 5,000 0 $ 68,000 NA NA 189 5,000 NA 2. Determine the unit product cost of each product according to the ABC system
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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production 16,000 units 53,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $34 in direct materials per unit, and Sprockets require $13. b. The direct labor wage rate is $19 per hour. 0.80 0.40 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) Estimated Overhead Cost $ 26,910 $ 120,000 $ 330,800 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 130 4,000 NA Activity Sprockets 104 0 ΝΑ Total 234 4,000 ΝΑ
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