Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding t
ID: 2430786 • Letter: F
Question
Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:
Additional information about the company follows:
Hubs require $37 in direct materials per unit, and Sprockets require $12.
The direct labor wage rate is $20 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
The ABC system has the following activity cost pools:
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.
DirectLabor-Hours per Unit Annual
Production Hubs 0.60 16,000 units Sprockets 0.20 47,000 units
Explanation / Answer
1 ABC Total cost Total cost driver Cost per driver Machine setups 31590 243 130 Special processing 198000 4400 45 Hubs Sprockets Machine setups 17550 14040 31590 Special processing 198000 0 198000 Total overheads cost 215550 14040 229590 Number of units 16000 47000 Overhead cost per unit 13.47 0.30 2 Hubs Sprockets Direct material 37 12 Direct labor 12 4 Overhead 13.47 0.3 Unit cost 62.47 16.3