Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding
ID: 2365330 • 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 0.80 10,000 units Sprockets 0.40 40,000 units Additional information about the company follows: a. Hubs require $32 in direct materials per unit, and Sprockets require $18. b. The direct labor wage rate is $15 per hour. c. Hubs are more complex to manufacture than Sprockets and they require special equipment. 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 $ 72,000 100 300 400 Special processing Machine-hours $ 200,000 5,000 0 5,000 General factory Direct labor-hours $ 816,000 8,000 16,000 24,000 Question: Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places. Omit the "$" sign in your response.) Unit product cost of Hubs $ Unit product cost of Sprockets $Explanation / Answer
Unit product cost of Hubs=$40.36
Unit product cost of Sprockets= $19.44
The unit product costs would be computed as follows, starting with the computation of the manufacturing overhead:
Hubs Machine setups:
$119.32 per setup
88 setups $119.32 per setup
88 setups Sprockets $ 10,500.16 $ 10,500.16
Special processing:
$36.35 per MH4,400 MHs
$36.35 per MH 2 MHs
General factory:
$5.77 per DLH
17,600 DLHs $5.77 per DLH 31,600 DLHs 159,940.00 72.70 101,552.00 182,332.00
Total overhead cost (a) Number of units produced