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Fogerty Company makes two products, Titanium Hubs and Sprockets. Data regarding the two products follow:
Additional information about the company follows: (i) Hubs require 32 in direct materials per unit, and Sprockets require 18 . (ii) The direct labor wage rate is 15 per hour. (iii) Hubs are more complex to manufacture than Sprockets and they require special equipment. (iv) The ABC system has the following activity cost pools:
(a) Compute the activity rate (i.e., predetermined overhead rate) for each activity cost pool.

Respuesta :

Activity cost pool machine setups special processing activity rates (a/b) $115.00 per setup $50.00 per machine hour .

Direct materials per unit is already given.            

             

*Calculations of Direct labor cost per unit:            

             

*Direct labor cost per unit  =  Direct labor hours per unit * Direct labor wages rate          

             

Hubs 0.90 * $10 $9.00          

Sprockets 0.50 * $10 $5.00          

             

*Calculations for Overhead cost per unit:            

             

 HUBS SPROCKETS  

Activity cost pool  

Machine setups 90 $115 $10,350 72 $115 $8,280  

Special processing 3500 $50 $175,000 0 $50 $0  

Total Manufacturing Overhead    $185,350     $8,280  

             

*Overhead cost per unit  =  Total manufacturing overhead / Annual production          

             

Hubs $185,350 / 28,000 $6.62          

Sprockets $8,280 / 50,000 $0.17

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