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

Question

Fogerty Company makes two products-titanlum Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Annual per Unit Production 0.50 12,800 units 0.1e 5e, units Hubs Sprockets Additional Information about the company follows: a. Hubs require $35 In direct materlals per unit, and Sprockets require $13 b. The direct labor wage rate Is $19 per hour c. Hubs require special equlpment and are more complex to manufacture than Sprockets d. The ABC system has the following activity cost pools Activit Estimated Overhead Cost $ 16,568 Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Hubs Sprockets Total 144 64 80 $ 70,000 3,5ee NA 0 3,5ee NA $51,0ee NA Requirec 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system. Complete this question by entering your answers in the tabs below Required 1Required 2 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.) Hubs Direct materials Direct labor Overhead Unit cost 0.00 S 0.00

Explanation / Answer

Answer: Requirement 1 Computation of the overhead rate using activity based costing approach Overhead Total cost Number of activity Cost per activity Machining setup activity $                  16,500.00 144 $              114.58 ($16,500/144) Special processing $                  70,000.00 3500 $                20.00 (70,000/3500) General factory $                  51,000.00 11000 $                   4.64 (51,000/11,000) $               137,500.00 Requirement 2 Cost allocation based on ABC approach Hubs Sprockets Total Machining setup activity cost $                    9,166.67 $                    7,333.33 $        16,500.00 ($114.58*80) ($114.58*64) Special processing $                  70,000.00 $                                 -   $        70,000.00 ($20*3500) General factory $                  27,818.18 $                  23,181.82 $        51,000.00 ($4.64*0.5*12000) ($4.64*0.10*50000) a Total cost $               106,984.85 $                  30,515.15 b Number of units produced 12000 50000 a/b Cost per unit $                            8.92 $                            0.61 Computation of unit cost Hubs Sprockets Direct material cost $                          35.00 $                          13.00 Add: Direct labours cost $                            9.50 $                            1.90 Add: Overhead cost $                            8.92 $                            0.61 Unit cost $                          53.42 $                          15.51

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---