Question: Fogerty Company makes two products—titanium Hubs
Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow: 
Additional information about the company follows: a. Hubs require $32 in direct materials per unit, and Sprockets require $18. 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: 
Required: 1. Compute the activity rate for each activity cost pool. Did you compute an activity rate for all of the activity cost pools? Why? 2. Determine the unit product cost of each product according to the ABC system.
Transcribed Image Text:
Direct Labor-Hours Annual per Unit Production Hubs ... 0.80 10,000 units Sprockets 0.40 40,000 units Estimated Activity Overhead Activity Cost Pool (Activity Measure) Cost Hubs Sprockets Total Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) $72,000 100 300 400 $200,000 $816,000 5,000 5,000 NA NA NA
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