Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding t

Question

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow Direct Labor-Hours Annual Hubs Sprockets per Unit Production 0.50 14,000 units 0.10 51,000 units Additional information about the company follows: a. Hubs require $38 in direct materials per unit, and Sprockets require $18. b. The direct labor wage rate is $16 per hour. C. Hubs are more complex to manufacture than Sprockets and they require special processing. d. The company's activity-based absorption costing system has the following activity cost pools: Estimated Overhead Expected Activity Activity Cost Pool (and Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (Direct labor-hours) Cost Hubs Sprockets Total 162 $16,20e 90 72 222,80 3,7e e 3,78e 145,20 7,00 5,100 12,100

Explanation / Answer

Rq 1: STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Machine setup Setup 16,200 162 100 Special prcessing Hours 222,000 3,700 60 General factory DLH 145,200 12,100 12 Req 2: Activity cost asigned: HUBS SPROCKETS Rate Activity Amount Activity Amount machine Setup 100 90 9000 720 72000 Sepcial procecssing 60 3700 222000 0 0 General factory 12 7000 84000 5100 61200 Total cost 315000 133200 Divide: Nuumber of units 14000 51000 Activity cost per unit 22.5 2.611765 UNIT PRODUCT COST: HUBS SPROCKET Material 38 18 Llabouorr 8 1.6 OH 22.5 2.61 Unit product cost 68.5 22.21

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