SOLUTION AT Australian Expert Writers
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
DirectLabor-Hoursper Unit
AnnualProduction
Hubs
0.90
25,000 units
Sprockets
0.50
49,000 units
Additional information about the company follows:
a.
Hubs require $26 in direct materials per unit, and Sprockets require $17.
b.
The direct labor wage rate is $19 per hour.
c.
Hubs are more complex to manufacture than Sprockets and they require special processing.
d.
The ABC system has the following activity cost pools:
EstimatedOverhead
Activity
Activity Cost Pool
Activity Measure
Cost
Hubs
Sprockets
Total
Machine setups
Number of setups
$
17,100
95
76
171
Special processing
Machine-hours
$
132,000
4,400
0
4,400
General factory
Direct labor-hours
$
423,000
22,500
24,500
47,000
Requirement 1:
Compute the activity rate for each activity cost pool.
Activity Cost Pool
Activity Rate
Machine setups
$
per setup
Special processing
$
per MH
General factory
$
per DLH
Requirement 2:
Determine the unit cost of each product according to the ABC system, including direct materials and direct labor.
Hubs
Sprockets
Direct materials
$
$
Direct labor
Overhead
Unit cost
$
$
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