Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding
ID: 2653378 • 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 20,000 units
Sprockets 0.40 58,000 units
Additional information about the company follows:
a.
Hubs require $31 in direct materials per unit, and Sprockets require $12.
b. The direct labor wage rate is $20 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 Activity
Activity Cost Pool (Activity Measure) Overhead Cost Hubs Sprockets Total
Machine setups (number of setups) $ 23,625 125 100 225
Special processing (machine-hours) $ 202,500 4,500 0 4,500
General factory (organization-sustaining) $ 294,400 NA NA NA
Required:
1. Compute the activity rate for each activity cost pool.
a. Machine setups per setup
b. Special processing per machine hours
2.
Determine the unit product cost of each product according to the ABC system. (Round intermediate calculations and final answers to 2 decimal places.)
Direct materials
direct labor
overhead
unit cost
Explanation / Answer
1)
overhead allocation:
2)
Total overhead total activity cost per activity Machine set up 23625 225 105 per set up special processing 202500 4500 45 per machine hour