schanel1969
Nov 26, 2006, 11:27 AM
Fogerty Company makes to products, titanium Hubs and Sprockets. Data regarding the
Two products follow:
Direct
Annual
Labor- Hours
Production
Per Unit
Hubs 0.80
10,000 units
Sprockets 0.40 40,000
Units
Additional information about the company follows:
A. Hubs require $32.00 in direct materials per unit, and Sprockets require $18
B. The direct labor wage rate is $15 per hour
C. Hubs are more complex to manufacture than Sprockets and they require special
Equipment
D. The ABC system has the following activity cost pools:
Activity Cost Pool Activity measure Estimated
Activity
Overhead Cost Total Hubs Sprockets
Machine setups Number of setups $72, 000
400 100 300
Special Processing machine Hours $200,000
5,000 5,000 --------
General Factory Direct Labor hours $816,000
24,000 8,000 16,000
Required:
1) Compute the activity rate for each activity cost pool
2) Determine the unit cost of each product according to the ABC system. Including
Direct materials and direct labor
Two products follow:
Direct
Annual
Labor- Hours
Production
Per Unit
Hubs 0.80
10,000 units
Sprockets 0.40 40,000
Units
Additional information about the company follows:
A. Hubs require $32.00 in direct materials per unit, and Sprockets require $18
B. The direct labor wage rate is $15 per hour
C. Hubs are more complex to manufacture than Sprockets and they require special
Equipment
D. The ABC system has the following activity cost pools:
Activity Cost Pool Activity measure Estimated
Activity
Overhead Cost Total Hubs Sprockets
Machine setups Number of setups $72, 000
400 100 300
Special Processing machine Hours $200,000
5,000 5,000 --------
General Factory Direct Labor hours $816,000
24,000 8,000 16,000
Required:
1) Compute the activity rate for each activity cost pool
2) Determine the unit cost of each product according to the ABC system. Including
Direct materials and direct labor