Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit 0.70 0.30 Annual Production 24,000 units 46,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $21 in direct materials per unit, and Sprockets require $16. b. The direct labor wage rate is $19 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 Required 2 Estimated Overhead Complete this question by entering your answers in the tabs below. Compute the activity rate for each activity cost pool. Activity Cost Pool Machine setups Special processing Cost $32,805 $ 275,000 $ 223,800 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. Activity Rate per setup per MH Hubs 135 5,000 NA Required 2 > Activity Sprockets 108 0 NA Total 243 5,000 ΝΑ

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit 0.70 0.30 Annual Production 24,000 units 46,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $21 in direct materials per unit, and Sprockets require $16. b. The direct labor wage rate is $19 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 Required 2 Estimated Overhead Complete this question by entering your answers in the tabs below. Compute the activity rate for each activity cost pool. Activity Cost Pool Machine setups Special processing Cost $32,805 $ 275,000 $ 223,800 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. Activity Rate per setup per MH Hubs 135 5,000 NA Required 2 > Activity Sprockets 108 0 NA Total 243 5,000 ΝΑ

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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Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
West Partners manufactures metal fixtures. Each fitting requires both steel and an alloy that can withstand extreme temperatures. The following data apply to the production of the fittings for year 1: Direct materials per unit 2.0 pounds of steel at $0.80 per pound 1.2 pounds of alloy at $16.00 per pound Direct labor per unit 0.84 hours at $30 per hour Overhead per unit Indirect materials Indirect labor Utilities Machine depreciation Other overhead Total overhead per unit The machine depreciation and other overhead costs are fixed and are based on production of 100,000 units annually. Plant capacity is 120,000 units annually. All other overhead costs are variable. $ 0.40 0.80 0.60 1.10 0.60 $ 3.50 The following are forecast for year 2. A wage increase of 6 percent for both direct and Indirect labor, which was negotiated recently. will go into effect. Steel prices are expected to decrease by 5 percent while alloy prices are expected to Increase by 10 percent. Machine depreciation costs…
[The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: DirectLabor-Hoursper unit AnnualProduction Rims 0.40 18,000 units Posts 0.70 77,000 units Additional information about the company follows: Rims require $14 in direct materials per unit, and Posts require $11. The direct labor wage rate is $15 per hour. Rims are more complex to manufacture than Posts and they require special equipment. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool Activity Measure EstimatedOverheadCost Rims Posts Total Machine setups Number of setups $ 30,030 120 80 200 Special processing Machine-hours $ 147,840 2,000 0 2,000 General factory Direct labor-hours $ 576,000 7,000 29,000 36,000 Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2…
Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow: DirectLabor-Hours per Unit AnnualProduction Hubs 0.70 19,000 units Sprockets 0.30 47,000 units Additional information about the company follows: Hubs require $35 in direct materials per unit, and Sprockets require $12. The direct labor wage rate is $11 per hour. Hubs require special equipment and are more complex to manufacture than Sprockets. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool (Activity Measure) Overhead Cost Hubs Sprockets Total Machine setups (number of setups) $ 12,825 75 60 135 Special processing (machine-hours) $ 220,000 4,400 0 4,400 General factory (organization-sustaining) $ 238,900 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.
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Marvel Parts, Incorporated, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,015 hours each month to produce 2,030 sets of covers. The standard costs associated with this level of production are: Direct materials Direct labor Variable manufacturing overhead (based on direct labor-hours) Direct materials (8,400 yards) Direct labor Variable manufacturing overhead Total $ 59,276 $ 8,120 $ 3,857 During August, the factory worked only 700 direct labor-hours and produced 1,500 sets of covers. The following actual costs were recorded during the month: Per Set of Covers $ 29.20 4.00 1.90 $ 35.10 Total $ 42,000 $ 6,300 $ 3,150 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance 3. Variable…
Haggstrom, Inc., manufactures steel fittings. Each fitting requires both steel and an alloy that allows the fitting to be used under extreme conditions. The following data apply to the production of the fittings. Direct materials per unit 3 pounds of steel at $0.55 per pound 0.5 pounds of alloy at $1.90 per pound Direct labor per unit 0.02 hours at $30 per hour Overhead per unit Indirect materials Indirect labor Utilities Plant and equipment depreciation Miscellaneous $0.60 0.75 0.55 0.90 0.70 Total overhead per unit $3.50 The plant and equipment depreciation and miscellaneous costs are fixed and are based on production of 250,000 units annually. All other costs are variable. Plant capacity is 300,000 units annually. All other overhead costs are variable. The following are forecast for year 2. Contract negotiations with the union are expected to lead to an increase in hourly direct labor costs of 4 percent, mostly in the form of additional benefits. Commodity prices, including steel,…
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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Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.30 for direct materials and $0.85 for direct labor. Incremental overhead to make this part is $1.44 per unit. The company can buy the part for $3.76 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should: Make Buy
Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Rims Posts: Direct Labor- Hours per unit 0.40 0.60 Additional information about the company follows: a. Rims require $20 in direct materials per unit, and Posts require $18. b. The direct labor wage rate is $18 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Activity Cost Pool Machine setups Special processing General factory Annual Production 26,000 units 88,000 units Unit product cost of Rims Unit product cost of Posts Activity Measure Number of setups Machine-hours Direct labor-hours. Estimated Overhead Cost $28,160 $ 164,560 $ 780,000 Estimated Activity Rims 110 2,000 10,400 Posts 90 0 52,800 Total 200 2,000 63,200 2. Determine the unit product cost of each product…