Fogerty Company makes two products titanium Hubs and Sprockets. Data regarding t
ID: 2331877 • Letter: F
Question
Fogerty Company makes two products titanium Hubs and Sprockets. Data regarding the two products follow Direct Labor- Hours per Unit 0.60 Hubs Sprockets 0.20 nual Production 25,000 units 52,000 units Additional information about the company follows: a. Hubs require $34 in direct materials per unit, and Sprockets require $16 b. The direct labor wage rate is $12 per hour. c. Hubs are more complex to manufacture than Sprockets and they require special processing. d. The company's activity-based absorption costing system has the following activity cost pools: Estimated Overhead Cost $ 20,790 180,0 Expected Activity tivity Cost Poo1 (and Activity Heasure) Machine setups (number of setups) Special processing (machine-hours) General factory (Direct labor-hours) Hubs 110 4,500 s 355, 6do 15,000 Sprock 198 4,500 25,400 10,400Explanation / Answer
Activity
Cost pool
Activity Driver
Total Activity Driver
Activity Rate
1
2
3
4
5 = 2/4
Machine setup
$ 20,790
Number of setup
198
$ 105/setup
Special Processing
$ 180,000
Machine hours
4500
$ 40/ machine hour
General factory
$ 355,600
Direct labor hours
25,400
$ 14 /direct labor hour
2. Unit Product Cost
Hubs
Sprockets
Direct Material
$ 34
$ 16
Direct Labor
$ 7.20
($12*0.60 hour)
$ 2.40
($12*0.20)
Manufacturing overhead:
Machine setup
$ 0.462
($105*110setup/25000units)
$ 0.18
($105*88setups/52000units)
Special Processing
$7.20
($40*4500hours/25000units)
--
General factory
$ 8.40
($14*15000hours/25000units)
$2.80
($14*10400hours/52000units)
Total Unit Product Cost
$57.262
$21.38
Activity
Cost pool
Activity Driver
Total Activity Driver
Activity Rate
1
2
3
4
5 = 2/4
Machine setup
$ 20,790
Number of setup
198
$ 105/setup
Special Processing
$ 180,000
Machine hours
4500
$ 40/ machine hour
General factory
$ 355,600
Direct labor hours
25,400
$ 14 /direct labor hour