QUESTION 2Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow:Direct Labor-Hours per Unit Annual Production0.8013,00051,000HubsSprockets 0.40Additional information about the company follows:unitsunits1. Hubs require $28 in direct materials per unit, and Sprockets require $12.2. The direct labor wage rate is $12 per hour.3. Hubs require special equipment and are more complex to manufacture than Sprockets.4. The ABC system has the following activity cost pools:Activity Cost Pool (Activity Measure)Machine setups (number of setups)Special processing (machine-hours)General factory (organization-sustaining)Estimated Overhead Cost$ 33,930$ 264,000$ 398,000Required:1. Compute the activity rate for each activity cost pool.2. Determine the unit product cost of each product according to the ABC system.For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).BIUSParagraphArial10pt111<!!!ActivityHubs Sprockets145 1164,800 0ΝΑNA>ען<Total2614,800ΝΑI.g

Lets understand the basics. Acitivity rate is calculated to allocate the overhead cost to actual…

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production 0.80 13,000 units 51,000 units Hubs Sprockets 0.40 Additional information about the company follows: 1. Hubs require $28 in direct materials per unit, and Sprockets require $12. 2. The direct labor wage rate is $12 per hour. 3. Hubs require special equipment and are more complex to manufacture than Sprockets. 4. The ABC system has the following activity cost pools:

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production 0.80 13,000 units 51,000 units Hubs Sprockets 0.40 Additional information about the company follows: 1. Hubs require $28 in direct materials per unit, and Sprockets require $12. 2. The direct labor wage rate is $12 per hour. 3. Hubs require special equipment and are more complex to manufacture than Sprockets. 4. The ABC system has the following activity cost pools:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Hubs Sprockets Unit 0.50 0.10 Annual Production 13,000 units 41,000 units Additional information about the company follows: a. Hubs require $35 in direct materials per unit, and Sprockets require $14. b. The direct labor wage rate is $10 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: 1. Compute the activity rate for each activity cost pool. Estimated Overhead Activity Cost Hubs $ 20,790 105 Sprockets 84 Total $ 200,000 5,000 0 $ 68,000 NA NA 189 5,000 NA 2. Determine the unit product cost of each product according to the ABC system
XYZ Co. produces two different products (Product Y and Product Z) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $500,000, while the cost of Inspection is $30,000. Product Y uses 20% of total machine hours and 75% of total batches. What is the total Machining cost assigned to Product Z? O a. $7,500 O b. None of the given answer is correct. Oc. $22,500 О с. O d. $400,000 O e. $375,000
A
Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.30 for direct materials and $0.85 for direct labor. Incremental overhead to make this part is $1.44 per unit. The company can buy the part for $3.76 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should: Make Buy
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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production 16,000 units 53,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $34 in direct materials per unit, and Sprockets require $13. b. The direct labor wage rate is $19 per hour. 0.80 0.40 c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Estimated Overhead Cost $ 26,910 $ 120,000 $ 330,800 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. Hubs 130 4,000 NA Activity Sprockets 104 0 ΝΑ Total 234 4,000 ΝΑ
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