Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow: DirectLabor-Hours per Unit AnnualProduction Hubs 0.70 11,000 units Sprockets 0.30 45,000 units Additional information about the company follows: Hubs require $25 in direct materials per unit, and Sprockets require $19. The direct labor wage rate is $15 per hour. Hubs require special equipment and are more complex to manufacture than Sprockets. The ABC system has the following activity cost pools: Estimated Activity Activity Cost Pool (Activity Measure) Overhead Cost Hubs Sprockets Total Machine setups (number of setups) $ 16,200 100 80 180 Special processing (machine-hours) $ 188,000 4,700 0 4,700 General factory (organization-sustaining) $ 196,700 NA NA NA Determine the unit product cost of each product according to the ABC system. HUBS SPROCKETS Direct Materials ?? ?? Direct Labor ?? ?? Overhead ?? ??

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2PB: Five Card Draw manufactures and sells 10,000 units of Aces, which retails for $200, and 8,000 units...

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Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:

	Direct Labor-Hours per Unit	Annual Production
Hubs	0.70	11,000	units
Sprockets	0.30	45,000	units

Additional information about the company follows:

Hubs require $25 in direct materials per unit, and Sprockets require $19.
The direct labor wage rate is $15 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
The ABC system has the following activity cost pools:

	Estimated	Activity
Activity Cost Pool (Activity Measure)	Overhead Cost	Hubs	Sprockets	Total
Machine setups (number of setups)	$	16,200	100	80	180
Special processing (machine-hours)	$	188,000	4,700	0	4,700
General factory (organization-sustaining)	$	196,700	NA	NA	NA

Determine the unit product cost of each product according to the ABC system.

HUBS SPROCKETS

Direct Materials ?? ??

Direct Labor ?? ??

Overhead ?? ??

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