Fogerty Company makes two products—titanium Hubs and Sprockets.Data regarding the two products follow:
| Direct
Labor-Hours per Unit | Annual
Production |
| Hubs | 0.70 | 26,000 | units |
| Sprockets | 0.30 | 48,000 | units |
|
Additional information about the company follows:
Hubs require $30 in direct materials per unit, and Sprocketsrequire $16.
The direct labor wage rate is $11 per hour.
Hubs require special equipment and are more complex tomanufacture 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) | $ | 29,160 | 135 | 108 | 243 |
| Special processing (machine-hours) | $ | 129,500 | 3,700 | 0 | 3,700 |
| General factory (organization-sustaining) | $ | 277,400 | NA | NA | NA |
|
Required:
1. Compute the activity rate for each activity cost pool.
2. Determine the unit product cost of each product according tothe ABC system.
