Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding
ID: 2353602 • 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 0.60 20,000 units
Sprockets 0.20 54,000 units
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Additional information about the company follows:
a. Hubs require $22 in direct materials per unit, and Sprockets require $17.
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 $ 17,010 90 72 162
Special processing Machine-hours $ 253,000 4,600 0 4,600
General factory Direct labor-hours $ 136,800 12,000 10,800 22,800
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Requirement 1:
Compute the activity rate for each activity cost pool. (Omit the "$" sign in your response.)
Activity Cost Pool Activity Rate
Machine setups $ per setup
Special processing $ per MH
General factory $ per DLH
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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 $ $
Direct labor
Overhead
Unit cost $
$
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Explanation / Answer
Requirement 1:
Compute the activity rate for each activity cost pool. (Omit the "$" sign in your response.)
Activity cost pool
Activity rate
calculation
Machine setups
105
(17010/162)
Special processing
55
(253000/4600)
General factory
6
(136800/22800)
Requirement 2:
Determine the unit cost of each product according to the ABC system, including direct materials and direct labor. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
Hubs
calculation
sprockets
calculation
Direct materials
22.00
17.00
Direct labor
10.20
(.6*17)
3.40
(.2*17)
Overhead
16.72
(105*90+55*4600+ 6*12000)/20000
1.34
(105*72+55*0+ 6*10800)/54000
Unit cost
48.92
21.74
Activity cost pool
Activity rate
calculation
Machine setups
105
(17010/162)
Special processing
55
(253000/4600)
General factory
6
(136800/22800)