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	29,000	units
Sprockets	0.20	44,000	units

Additional information about the company follows:

1. Hubs require $27 in direct materials per unit, and Sprockets require $12.

2. The direct labor wage rate is $17 per hour.

3. Hubs require special equipment and are more complex to manufacture than Sprockets.

4. 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)	$	17,100	95	76	171
Special processing (machine-hours)	$	161,000	4,600	0	4,600
General factory (organization-sustaining)	$	158,200	NA	NA	NA

Required:

1. Compute the activity rate for each activity cost pool.

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

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Hubs Sprockets Direct materials $27.00 $12.00 Direct labor 10.20 3.40 Overhead Unit cost $37.20 $15.40

Just having some trouble figuring out the overhead cost per unit.

Answer 1

	Hubs		Sprockets
	Answer	Working	Answer	Working
Direct materials	$                                     27.00	[given]	$                        12.00	[given]
Direct labor	$                                     10.20	0.60 DLHs x $ 17	$                         3.40	0.20 DLHs x $ 17
Overhead	$                                       5.88	[ (95 x$ 100) + (4600 x $35)]/29000 units]	$                         0.17	[ (76 x $ 100) / 44000]
Unit cost	$                                     43.08		$                        15.57

--Working

Activity Cost Pool	Overhead cost	Total Activity	Activity Rate
	[A]	[B]	[C = A/B]
Machine setups	$17,100	171	$100.000	per setup
Special processing	$161,000	4600	$35.00	per MH