Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit 0.60 0.20 Annual Production 11,000 units 47,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $32 in direct materials per unit, and Sprockets require $15. 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) General factory (organization-sustaining) Estimated Overhead Cost $ 26,460 $ 150,500 $ 53,600 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 140 4,300 ΝΑ Activity Sprockets 112 0 ΝΑ Total 252 4,300 ΝΑ
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit 0.60 0.20 Annual Production 11,000 units 47,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $32 in direct materials per unit, and Sprockets require $15. 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) General factory (organization-sustaining) Estimated Overhead Cost $ 26,460 $ 150,500 $ 53,600 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 140 4,300 ΝΑ Activity Sprockets 112 0 ΝΑ Total 252 4,300 ΝΑ
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours per
Unit
0.60
0.20
Annual Production
11,000 units
47,000 units
Hubs
Sprockets
Additional information about the company follows:
a. Hubs require $32 in direct materials per unit, and Sprockets require $15.
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)
General factory (organization-sustaining)
Estimated Overhead
Cost
$ 26,460
$ 150,500
$ 53,600
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
140
4,300
ΝΑ
Activity
Sprockets
112
0
ΝΑ
Total
252
4,300
ΝΑ](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb0cbed2-99af-4cfb-b3c5-01519e663d29%2Fb6cae4bc-6f20-4dd1-8462-cd11bf36005f%2Fwm3fgf_processed.png&w=3840&q=75)
Transcribed Image Text:Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours per
Unit
0.60
0.20
Annual Production
11,000 units
47,000 units
Hubs
Sprockets
Additional information about the company follows:
a. Hubs require $32 in direct materials per unit, and Sprockets require $15.
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)
General factory (organization-sustaining)
Estimated Overhead
Cost
$ 26,460
$ 150,500
$ 53,600
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
140
4,300
ΝΑ
Activity
Sprockets
112
0
ΝΑ
Total
252
4,300
ΝΑ
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Step 1: Introduction to Activity Based Costing system
VIEWStep 2: 1) Calculation of activity rate:
VIEWStep 3: Working note for overhead cost per unit :
VIEWStep 4: Working note for direct labor cost per unit :
VIEWStep 5: 2) Calculation of unit product cost of each activity using ABC system:
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