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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Hubs Sprockets per Unit Annual Production 0.90 28,000 units 0.50 47,000 units Additional information about the company follows: a. Hubs require $31 in direct materials per unit, and Sprockets require $17. 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: Estimated Activity Overhead Cost $ 20,790 Hubs Sprockets Total 110 88 $ 90,000 4,500 0 198 4,500 $354,200 NA NA NA 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system.

Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Hubs Sprockets per Unit Annual Production 0.90 28,000 units 0.50 47,000 units Additional information about the company follows: a. Hubs require $31 in direct materials per unit, and Sprockets require $17. 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: Estimated Activity Overhead Cost $ 20,790 Hubs Sprockets Total 110 88 $ 90,000 4,500 0 198 4,500 $354,200 NA NA NA 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Hubs Sprockets per Unit Annual Production 0.90 28,000 units 0.50 47,000 units Additional information about the company follows: a. Hubs require $31 in direct materials per unit, and Sprockets require $17. 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: Estimated Activity Overhead Cost $ 20,790 Hubs Sprockets Total 110 88 $ 90,000 4,500 0 198 4,500 $354,200 NA NA NA 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system.
Transcribed Image Text:Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Hubs Sprockets per Unit Annual Production 0.90 28,000 units 0.50 47,000 units Additional information about the company follows: a. Hubs require $31 in direct materials per unit, and Sprockets require $17. 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: Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing (machine-hours) General factory (organization-sustaining) Required: Estimated Activity Overhead Cost $ 20,790 Hubs Sprockets Total 110 88 $ 90,000 4,500 0 198 4,500 $354,200 NA NA NA 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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