Homework SourseFogerty Company makes two productstitanium Hubs and Sprocket
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Unit Production 0.50 13,000 units 0.10 56,000 units Annual Hubs Sprockets Additional information about the company follows a. Hubs require $22 in direct materials per unit, and Sprockets require $15 b. The direct labor wage rate is $17 per hour C. Hubs require special equipment and are more complex to manufacture than Sprockets d. The ABC system has the following activity cost pools Activit Estimated Overhead Cost $ 14,400 Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) 80 $140,000 3,500 NA Hubs Sprockets Total 144 0 3,500 NA 64 $ 51,300 NA 
Solution
1) Activity Cost pool Activity rate Machine setups $ 100 per setup special Processing $ 40 per MH Working: Activity Cost pool Estimated Overhead costs Total Activity Activity rate Machine setups $ 14,400 144 $ 100 per setup special Processing $ 1,40,000 3500 $ 40 per MH 2) Hubs Sprockets Direct Materials $ 22.00 $ 15.00 Direct Labor $ 8.50 $ 1.70 Overhead $ 11.38 $ 0.11 Unit cost $ 41.88 $ 16.81 Working: a. Hubs Sprockets Direct Labor hours per unit 0.50 0.10 Direct Labor wages rate $ 17 $ 17 Direct Labor costs $ 8.50 $ 1.70 b. Overhead assignment Hubs Sprockets Activity rate Number of activity Overhead assigned Number of activity Overhead assigned Machine setups $ 100 80 $ 8,000 64 $ 6,400 special processing $ 40 3500 $ 1,40,000 $ 1,48,000 $ 6,400 c. Hubs Sprockets Total Overhead costs $ 1,48,000 $ 6,400 Total Production in units 13,000 56,000 Overhead costs per unit $ 11.38 $ 0.11