Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding
ID: 2344482 • Letter: F
Question
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:Direct Labor-Hours per Unit Annual Production
Hubs 0.70 27,000 units
Sprockets 0.30 56,000 units
Additional information about the company follows:
a. Hubs require $34 in direct materials per unit, and Sprockets require $15.
b. The direct labor wage rate is $17 per hour.
c. Hubs are more complex to manufacture than Sprockets and they require special processing.
d. The ABC system has the following activity cost pools:
Estimated
Overhead Activity
Activity Cost Pool Activity Measure Cost Hubs Sprockets Total
Machine setups Number of setups $ 21,735 115 92 207
Special processing Machine-hours $ 120,000 4,800 0 4,800
General factory Direct labor-hours $ 357,000 18,900 16,800 35,700
Requirement 1:
Compute the activity rate for each activity cost pool. (Omit the "$" sign in your response.)
Activity Cost Pool Activity Rate
Machine setups 105 per setup
Special processing 25 per MH
General factory 10 per DLH
Requirement 2:
Determine the unit cost of each product according to the ABC system, including direct materials and direct labor. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
Hubs Sprockets
Direct materials 34 15
Direct labor $ $
Overhead $ $
Unit cost $ $
Explanation / Answer
1)Activity rate for each activity pool machine setup cost=21735/(115+95)=105 per setup special processing cost=120000/4800=25 per machine hour general factory cost=357000/(18900+16800)=10 per direct labour hour 2)UNIT COST OF EACH PRODUCT HUBS(27000u) SPROCKETS(56000u) direct materials cost (34*27000,15*56000) 918000 840000 direct labour cost (17*.7*27000,17*.3*56000) 321300 285600 OVERHEAD COST a.setupcost@105 per setup (105*115,105*92) 12075 9660 b.special processing cost (25*4800) 120000 0 c.general factory oh (10*18900,16800) 189000 168000 TOTAL 1560375 1303260 cost per unit (1560375/27000,1303260/56000) 57.79 23.27