Question Completion:
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor Production
hours per unit Units
Hubs 0.7 27,000
Sprockets 0.3 59,000
Answer:
Fogerty Company
The unit product cost of each product according to the ABC system:
Hubs Sprockets
Unit production cost $46.22 $22.46
Explanation:
a) Data and Calculations:
Hubs Sprockets
Direct materials per unit $24 $17
Direct labor rate per hour $14 $14
Direct labor per unit $9.80 $4.20 ($14 *0.3)
Estimated Activity Activity Cost Pool Overhead Hubs Sprockets Total
(Activity Measure) Cost
Machine setups (number of setups) $ 27,000 125 100 225
Special processing (machine-hours) $ 258,000 4,300 0 4,300
General factory (organization-sustaining) $ 124,800 NA NA NA
Total overhead expenses $409,800
Activity rate:
Machine setups = $120 ($27,000/225)
Special processing = $60 ($258,000/4,300)
General factory = $62,400 ($124,800/2)
2. The unit product cost of each product according to the ABC:
Overhead costs:
Hubs Sprockets Total
Machine setups $15,000 $12,000 $27,000
Special processing 258,000 0 258,000
General factory 62,400 62,400 124,800
Total overhead $335,400 $74,400 $409,800
Units produced 27,000 59,000 86,000
Overhead per unit $12.42 $1.26
Hubs Sprockets
Direct materials per unit $24.00 $17.00
Direct labor per unit $9.80 $4.20
Overhead cost per unit $12.42 $1.26
Unit production cost $46.22 $22.46
