Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding
ID: 2607502 • Letter: F
Question
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow Direct Labor- Hours per Unit 0.50 0.10 Annus Hubs Sprockets Production 25,000 units 44.000 units Additional information about the company follows a. Hubs require $23 in direct materials per unit, and Sprockets require $16. b. The direct labor wage rate is S11 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 Activity Sprockets 72 Estimated Total Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (mschine-hours) General factory (or Overhesd Cost Hubs 90 5 15.390 5 111,000 3.700 S 34,500 162 3,700 NA ganization-sustaining) NA NA Required: 1. Compute the activity rate for each activity cost pool ctivity Cost Pool Activity Rate Machine setups Special processing setu per MH 2. Determine the unit product cost of each product according to the ABC system. (Round intermediate caiculations and final answers to 2 decimal places.) Hubs Sprockets Direct materials Direct labor Unit costExplanation / Answer
Answer
Activity Cost
Amount (A)
Total Activity (B)
Activity Rate (A/B)
Machine Setup
15390
162
95
per setup
Special Processing
111000
3700
30
per MH
General Factory
34500
- -
- -
TOTAL
160890
Hubs
Sprockets
Overhead
Amount
Activity Rate (A)
Activity (B)
Cost Allocated (A x B)
Activity (C )
Cost Allocated (A x C)
Machine Setup
15390
95
90
8550
72
6840
Special Processing
111000
30
3700
111000
0
0
General Factory
34500
N/A
N/A
N/A
N/A
N/A
Total
160890
Total
119550
Total
6840
Total units
25000
Total units
40000
Cost allocated per unit
4.78
0.17
Hus
Sprockets
Direct materials
23
16
Direct Labor
[$11 x 0.5] 5.5
[$11 x 0.1] 1.1
Overhead
4.78
0.17
Unit Cost
33.28
17.27
Activity Cost
Amount (A)
Total Activity (B)
Activity Rate (A/B)
Machine Setup
15390
162
95
per setup
Special Processing
111000
3700
30
per MH
General Factory
34500
- -
- -
TOTAL
160890