Fogerty Company makes two products titanium Hubs and Sprocke

Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow Direct Labor- Hours per Unit 0.50 0.10 Annus Hubs Sprockets Production 25,000 units 44.000 units Additional information about the company follows a. Hubs require $23 in direct materials per unit, and Sprockets require $16. b. The direct labor wage rate is S11 per hour c. Hubs are more complex to manufacture than Sprockets and they require special equipment. d. The ABC system has the following activity cost pools Activity Sprockets 72 Estimated Total Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (mschine-hours) General factory (or Overhesd Cost Hubs 90 5 15.390 5 111,000 3.700 S 34,500 162 3,700 NA ganization-sustaining) NA NA Required: 1. Compute the activity rate for each activity cost pool ctivity Cost Pool Activity Rate Machine setups Special processing setu per MH 2. Determine the unit product cost of each product according to the ABC system. (Round intermediate caiculations and final answers to 2 decimal places.) Hubs Sprockets Direct materials Direct labor Unit cost

Solution

Answer

Activity Cost

Amount (A)

Total Activity (B)

Activity Rate (A/B)

Machine Setup

15390

162

95

per setup

Special Processing

111000

3700

30

per MH

General Factory

34500

- -

- -

TOTAL

160890

Hubs

Sprockets

Overhead

Amount

Activity Rate (A)

Activity (B)

Cost Allocated (A x B)

Activity (C )

Cost Allocated (A x C)

Machine Setup

15390

95

90

8550

72

6840

Special Processing

111000

30

3700

111000

0

0

General Factory

34500

N/A

N/A

N/A

N/A

N/A

Total

160890

Total

119550

Total

6840

Total units

25000

Total units

40000

Cost allocated per unit

4.78

0.17

Hus

Sprockets

Direct materials

23

16

Direct Labor

[$11 x 0.5] 5.5

[$11 x 0.1] 1.1

Overhead

4.78

0.17

Unit Cost

33.28

17.27

Activity Cost	Amount (A)	Total Activity (B)	Activity Rate (A/B)
Machine Setup	15390	162	95	per setup
Special Processing	111000	3700	30	per MH
General Factory	34500	- -	- -
TOTAL	160890