Solution-Compute the activity rate for each activity cost

Compute the activity rate for each activity cost pool

Reference no: EM13861381

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

Additional information about the company follows:

a. Hubs require $32 in direct materials per unit, and Sprockets require $18.

b. The direct labor wage rate is $15 per hour.

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

	Estimated Overhead Cost	Activity
Activity Cost Pool (Activity Measure)		Hubs	Sprockets	Total
Machine setup (number of setups)	$72,000	100	300	400
Special processing (machine-hours)	$200,000	5,000	0	5,000
General factory (organization-sustaining)	$816,000	NA	NA	NA

d. The ABC system has the following activity cost pools:

a. Compute the activity rate for each activity cost pool. Did you compute an activity rate for all of the activity cost pools? Why?

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

Reference no: EM13861381

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Compute the activity rate for each activity cost pool

Reference no: EM13861381

Reference no: EM13861381

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