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Fogerty Company makes two products—titanium Hubs and Sprockets

Accounting

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Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:  Direct

Labor-Hours per UnitAnnual

ProductionHubs0.7029,000unitsSprockets0.3048,000units

 

Additional information about the company follows:

 

1. Hubs require $33 in direct materials per unit, and Sprockets require $15.
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:

 

 EstimatedActivityActivity Cost Pool (Activity Measure)Overhead CostHubsSprocketsTotalMachine setups (number of setups)$21,8709072162Special processing (machine-hours)$230,0004,60004,600General factory (organization-sustaining)$308,300NANANA

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.