Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding t
ID: 2538318 • 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 $25 in direct materials per unit, and Sprockets require $16.
The direct labor wage rate is $13 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.
Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
How to find the overhead????
DirectLabor-Hours per Unit Annual
Production Hubs 0.50 10,000 units Sprockets 0.10 53,000 units
Explanation / Answer
Activity rate Machine setups 110 =24750/225 Special processing 35 =126000/3600 Overhead allocation: Hubs: Machine setups 13750 =110*125 Special processing 126000 Total 139750 Units 10000 Overhead per unit 13.98 Sprockets : Machine setups 11000 =110*100 Special processing 0 Total 11000 Units 53000 Overhead per unit 0.21 Hubs Sprockets Direct materials $25.00 $16.00 Direct labor 6.50 1.30 Overhead 13.98 0.21 Unit cost $45.48 $17.51