Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets Direct Labor-Hours per Unit 0.70 0.30 Annual Production 21,000 units 42,000 units Additional information about the company follows: a. Hubs require $38 in direct materials per unit, and Sprockets require $18. 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) Estimated Overhead Cost $ 32,760 $264,000 Hubs Activity Sprockets Total 130 104 234 4,800 0 4,800 $ 115,500 NA NA NA General factory (organization-sustaining) 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.

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Hubs Sprockets Direct Labor-Hours per Unit 0.70 0.30 Annual Production 21,000 units 42,000 units Additional information about the company follows: a. Hubs require $38 in direct materials per unit, and Sprockets require $18. 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) Estimated Overhead Cost $ 32,760 $264,000 Hubs Activity Sprockets Total 130 104 234 4,800 0 4,800 $ 115,500 NA NA NA General factory (organization-sustaining) 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.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 6PA: Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin...

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