Question - Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
|
|
Direct Labor- Hours per Unit
|
Annual Production
|
|
Hubs
|
0.60
|
22,000 units
|
|
Sprockets
|
0.20
|
43,000 units
|
Additional information about the company follows:
a. Hubs require $33 in direct materials per unit, and Sprockets require $17.
b. The direct labor wage rate is $12 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:
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Activity Cost Pool (Activity Measure)
|
Estimated Overhead Cost
|
Activity
|
|
Hubs
|
Sprockets
|
Total
|
|
Machine setups (number of setups)
|
$13,680
|
80
|
64
|
144
|
|
Special processing (machine-hours)
|
$282,000
|
4,700
|
0
|
4,700
|
|
General factory (organization-sustaining)
|
$90,600
|
NA
|
NA
|
NA
|
Determine the unit product cost of each product according to the ABC system.