Problem - Compute A B C costs. Haggerty company makes two types or products. They are wheels and sprockets.
Wheels: .80Direct Labor Hours Per Unit 10,000 annual production.
Sprockets: .40 Direct Labor Hours per unit. 40,000 annual productions.
Additional information:
a. Wheels require 32$ in direct materials per unit, Sprockets requires 18$.
b. The direct labor wage rate is 15$ per hour
c. Wheels are more complex to manufacture than sprockets and the require special equipment.
d. The ABC system has the following activity pools:
|
|
|
Activity
|
|
Activity Cost Pool
|
Activity Measure
|
Est overhead Cost
|
Wheels
|
Sprockets
|
Total
|
|
Machine Setups
|
Number of setups
|
72000
|
100
|
300
|
400
|
|
Special Processing
|
Machine Hours
|
200000
|
5000
|
0
|
5000
|
|
General Factory
|
Direct Labor Hours
|
816000
|
8000
|
16000
|
24000
|
Required -
Compute the activity rate for each activity cost pool.
Determine the unit product cost of each product according to the A B C system.