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
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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:
Direct
Labor-
Hours:
Hubs
Sprockets
per
Unit
Annual
Production.
0.80 25,000 units
0.40 48,000 units
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 $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)
Required 1 Required 2
Activity Cost Pool
Machine setups
Special processing
Estimated
Overhead
Cost
Compute the activity rate for each activity cost pool.
Activity Rate:
per
setup
per MH
$ 21,780
$ 72,000
$192,800
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
Hubs Sprockets
110
Complete this question by entering your answers in the tabs below.
3,600
NA
88
0
NA
Total
198
3,600
NA
Transcribed Image Text:Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours: Hubs Sprockets per Unit Annual Production. 0.80 25,000 units 0.40 48,000 units 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 $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) Required 1 Required 2 Activity Cost Pool Machine setups Special processing Estimated Overhead Cost Compute the activity rate for each activity cost pool. Activity Rate: per setup per MH $ 21,780 $ 72,000 $192,800 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 Hubs Sprockets 110 Complete this question by entering your answers in the tabs below. 3,600 NA 88 0 NA Total 198 3,600 NA
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 $17 per hour.
c. Hubs require special equipment and are more complex to manufacture than S
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
Complete this question by entering your answers in the tabs below.
Direct materials
Direct labor
Overhead
Unit cost
Estimated
Overhead
Cost
$ 21,780
$ 72,000
$192,800
Hubs
Hubs
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.
Sprockets
< Required 1
110
3,600
NA
Determine the unit product cost of each product according to the ABC system. (Do no
your answers to 2 decimal places.)
At
Sp
Required 2 >
Transcribed Image Text: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 $17 per hour. c. Hubs require special equipment and are more complex to manufacture than S 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 Complete this question by entering your answers in the tabs below. Direct materials Direct labor Overhead Unit cost Estimated Overhead Cost $ 21,780 $ 72,000 $192,800 Hubs Hubs 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. Sprockets < Required 1 110 3,600 NA Determine the unit product cost of each product according to the ABC system. (Do no your answers to 2 decimal places.) At Sp Required 2 >
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