Business, 03.06.2021 01:00 xem74

Additional information about the company follows: Hubs require $24 in direct materials per unit, and Sprockets require $17. The direct labor wage rate is $14 per hour. Hubs require special equipment and are more complex to manufacture than Sprockets. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool (Activity Measure) Overhead Cost Hubs Sprockets Total Machine setups (number of setups) $ 27,000 125 100 225 Special processing (machine-hours) $ 258,000 4,300 0 4,300 General factory (organization-sustaining) $ 124,800 NA 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.

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Answer from: Cassandra100

Question Completion:

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

Direct Labor Production

hours per unit Units

Hubs 0.7 27,000

Sprockets 0.3 59,000

Fogerty Company

The unit product cost of each product according to the ABC system:

Hubs Sprockets

Unit production cost $46.22 $22.46

Explanation:

a) Data and Calculations:

Hubs Sprockets

Direct materials per unit $24 $17

Direct labor rate per hour $14 $14

Direct labor per unit $9.80 $4.20 ($14 *0.3)

Estimated Activity Activity Cost Pool Overhead Hubs Sprockets Total

(Activity Measure) Cost

Machine setups (number of setups) $ 27,000 125 100 225

Special processing (machine-hours) $ 258,000 4,300 0 4,300

General factory (organization-sustaining) $ 124,800 NA NA NA

Total overhead expenses $409,800

Activity rate:

Machine setups = $120 ($27,000/225)

Special processing = $60 ($258,000/4,300)

General factory = $62,400 ($124,800/2)

2. The unit product cost of each product according to the ABC:

Overhead costs:

Hubs Sprockets Total

Machine setups $15,000 $12,000 $27,000

Special processing 258,000 0 258,000

General factory 62,400 62,400 124,800

Total overhead $335,400 $74,400 $409,800

Units produced 27,000 59,000 86,000

Overhead per unit $12.42 $1.26

Hubs Sprockets

Direct materials per unit $24.00 $17.00

Direct labor per unit $9.80 $4.20

Overhead cost per unit $12.42 $1.26

Unit production cost $46.22 $22.46

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Additional information about the company follows: Hubs require $24 in direct materials per unit, and...

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