Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets Direct Labor-Hours per Unit 0.70 0.30 Annual Production 21,000 units 42,000 units Additional information about the company follows: a. Hubs require $38 in direct materials per unit, and Sprockets require $18. b. The direct labor wage rate is $17 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) Estimated Overhead Cost $ 32,760 $264,000 Hubs Activity Sprockets Total 130 104 234 4,800 0 4,800 $ 115,500 NA NA NA 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:
Hubs
Sprockets
Direct Labor-Hours per Unit
0.70
0.30
Annual Production
21,000 units
42,000 units
Additional information about the company follows:
a. Hubs require $38 in direct materials per unit, and Sprockets require $18.
b. The direct labor wage rate is $17 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)
Estimated Overhead Cost
$ 32,760
$264,000
Hubs
Activity
Sprockets
Total
130
104
234
4,800
0
4,800
$ 115,500
NA
NA
NA
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.
Transcribed Image Text:Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets Direct Labor-Hours per Unit 0.70 0.30 Annual Production 21,000 units 42,000 units Additional information about the company follows: a. Hubs require $38 in direct materials per unit, and Sprockets require $18. b. The direct labor wage rate is $17 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) Estimated Overhead Cost $ 32,760 $264,000 Hubs Activity Sprockets Total 130 104 234 4,800 0 4,800 $ 115,500 NA NA NA 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.
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