Question: fogerty company makes two productstitanium hubs and sprockets data regarding...
Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours per Unit Annual Production
Hubs 0.50 24,000 units
Sprockets 0.10 57,000 units
Additional information about the company follows:
Hubs require $27 in direct materials per unit, and Sprockets require $11.
The direct labor wage rate is $19 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
The ABC system has the following activity cost pools:
Activity Cost Pool (Activity Measure) Estimated Overhead Activity
cost Hubs Sprockets Total
Machine setups (number of setups) $ 13,500 75 60 135
Special processing (machine-hours) $ 210,000 4,200 0 4,200
General factory (organization-sustaining) $ 91,800 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.