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 | 14,000 | units |
| Sprockets | 0.40 | 54,000 | units |
|
Additional information about the company follows:
Hubs require $37 in direct materials per unit, and Sprocketsrequire $14.
The direct labor wage rate is $19 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) | $ | 32,805 | 135 | 108 | 243 |
| Special processing (machine-hours) | $ | 216,000 | 3,600 | 0 | 3,600 |
| General factory (organization-sustaining) | $ | 335,200 | 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.
| Activity Cost Pool | Activity Rate | | Machine setups | | per setup | | Special processing | | per MH |
|
|
| | Hubs | Sprockets | | Direct materials | | | | Direct labor | | | | Overhead | | | | Unit cost | | |
|
