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    schanel1969 Posts: 2, Reputation: 1
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    #1

    Nov 26, 2006, 11:27 AM
    Cost pool / unit cost
    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

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