Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding
ID: 2435067 • 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 21,000 units
Sprockets 0.40 86,000 units
Additional information about the company follows:
a. Hubs require $15 in direct materials per unit, and Sprockets require $12.
b. The direct labor wage rate is $17 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 $ 22,000 99 79 178
Special processing Machine-hours $ 150,000 4,400 1 4,401
General factory Direct labor-hours $ 274,000 16,800 34,400 51,200
Requirement 1:
Compute the activity rate (i.e., predetermined overhead rate) for each activity cost pool. (Do not round intermediate calculation. Round your final answers to 2 decimal places. Omit the "$" sign in your response.)
Activity Cost Pool Activity Rate
Machine setups $ per setup
Special processing $ per MH
General factory $ per DLH
Requirement 2:
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
Requirement 1: Compute the activity rate (i.e., predetermined overhead rate) for each activity cost pool. (Do not round intermediate calculation. Round your final answers to 2 decimal places. Omit the "$" sign in your response.) Activity Cost Pool Activity Rate Per Unit cost HUB SPROCKET Machine setups $ 123.60 per setup 0.583 0.113 Special processing $ 34.08 per MH 7.141 0.001 General factory $ 5.35 per DLH 4.281 2.141. Total 12.005 2.255 Requirement 2: 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 $ Direct Material $15.00 Direct labor $13.60 Overheads $12.01 TOTAL $40.61 Unit product cost of Sprockets $ Direct Material $12.00 Direct labor $ 6.80 Overheads $ 2.26 TOTAL $21.06