90.2K
Verified Solution
Link Copied!
Fogerty Company makes two productstitanium Hubs and Sprockets. Data regarding the two products follow:
| | Direct Labor-Hours per Unit | Annual Production |
| Hubs | 0.60 | 11,000 | units |
| Sprockets | 0.20 | 47,000 | units |
| |
Additional information about the company follows:
Hubs require $22 in direct materials per unit, and Sprockets require $14.
The direct labor wage rate is $14 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
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) | $ | 13,680 | 80 | 64 | 144 |
| Special processing (machine-hours) | $ | 123,000 | 4,100 | 0 | 4,100 |
| General factory (organization-sustaining) | $ | 81,800 | NA | NA | NA |
| |
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.
Answer & Explanation
Solved by verified expert
