Question

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

Answer 1

Answer:

activitity rate:

$\left[\begin{array}{ccccc} Activity& Driver& cost& Total& Rate\\ Machine Setups&setups&72,000&400&180\\ Special processing& machine hours&200,000&5,000&40\\ General factory& direct labor hours&816,000&24,000&34\\\end{array}\right]$

sprocked unit cost: $ 38.95

hub units cost:        $  93.00

Explanation:

We divide teh cost pool over the total of the cost driver.

This give us the activitty rate.

Then we multiply each rate by the use of each product:

And divide by the total units to get the unti manufacturing overhead

$\left[\begin{array}{ccc} Activity& Hubs& Sprockets\\ Machine Setups&18,000&54,000\\ Special processing&200,000&0\\ General factory&272,000&54,4000\\ Total&490,000&598,000\\ Units&10,000&40,000\\ Overhead per unit&49&14.95\\\end{array}\right]$

Finally we add the cost component:

Sprocked:

materials $ 18 + $ 15 x 0.40 units + $ 14.95 = 38.95

Hubs

materials $ 32 + $ 15 x 0.80 units + $ 49 = 93