Question

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor Hours per Annual Unit Production 0.5e 25,000 units @.10 45 , ᎾᎾᎾ units Hubs Sprockets Additional information about the company follows: a. Hubs require $27 in direct materials per unit, and Sprockets require $14. b. The direct labor wage rate is $15 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) Estimated Overhead Cost $ 16,200 $123,000 $ 80,000 Hubs 75 4,100 NA Activity Sprockets Total 60 135 4,100 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the activity rate for each activity cost pool. Activity Cost Pool Activity Rate per setup Machine setups Special processing per MH Prey 2 of

Answer 1

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A B с D E 1 2 3 Activity Cost pool Machine setups Special processing Activity Rate 120 Per set up 30 Per MH 4 5 6 Hubs 7 8 Cost per unit Direct materials Direct labor Overhead Unit cost Sprockets 27 14 7.5 1.5 5.28 0.16 39.78 15.66 9 10 11 12 13 14 Overhead cost per unit Hubs Sprockets Machine setups 9000 7200 Special processing 123000 0 Total overhead 132000 7200 Units 25000 45000 Overhead cost per unit 5.28 0.16 15 16 17 18

For calculation ref:

А B C D 1 2 3 Activity Cost pool Machine setups Special processing Activity Rate =16200/135 Per set up =123000/4100 Per MH 4 5 6 Hubs 7 27 8 Cost per unit Direct materials Direct labor Overhead Unit cost Sprockets 14 =0.1*15 =D17 =SUM(D7:09) 1=0.5*15 =C17 =SUM(C7:09) 9 10 11 12 13 14 Overhead cost per unit Hubs Sprockets Machine setups =75*C3 =60*C3 Special processing =C4*4100 =0*C4 Total overhead =SUM(C13:C14) =SUM(D13:014) Units 25000 |45000 Overhead cost per unit =C15/16 =D15/D16 15 16 17 18