EXERCISE 7-7 Computing ABC Product Costs [L03,L04] ucts follow: company makes two products, titanium Hubs...
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EXERCISE 7-7 Computing ABC Product Costs [L03,L04] ucts follow: company makes two products, titanium Hubs and Sprockets. Data regarding the two prod- Direct Labor- Hours per Unit 0.80 0.40 Annual Production 10,000 units 40,000 units Additional information about the company follows: a. Hubs require $32 in direct materials per unit, and Sprockets require $18. b. The direct labor wage rate is $15 per hour. c. Hubs are more complex to manufacture than Sprockets and they require special processing. d. The ABC system has the following activity cost pools: Microsoft bocel Eile Edit Yew Insert Format Iools Data wndow Adobe pr Calbri D19 Estimated Overhead Cost Activity Sprockets 2 Activity Cost Pool (ond Activity Measure) 3 Machine setups (number of setups) 4 Special processing (machine-hours) 5 General factory (Direct labor-hours) Hubs Total 572,000 100 300 400 $200,000 5,000 0 5,000 $816,000 8,000 16,000 24,000 14 4 Sheet 1.ksheets(Sheet3/ Ready NUM Required: 1. Compute the activity rate for each activity cost pool 2. Determine the unit cost of each product according to the ABC system, including direct mat eri- als and direct labor
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