Additional information about the company follows: Hubs require $25 in direct mat

Question

Additional information about the company follows: Hubs require $25 in direct materials per unit, and Sprockets require $18. The direct labor wage rate is $12 per hour. Hubs are more complex to manufacture than Sprockets and they require special processing The ABC system has the following activity cost pools: Compute the activity rate for each activity cost pool. (Omit the "$" sign in your response.) Determine the unit cost of each product according to the ABC system, including direct materials and direct labor. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

Requirement 1
Machine setups   $21,600 / 180             = $120 per machine setup
Special processing $225,500 / 4,100      = $55 per processing
General factory       $470,000 / 29,400 = $16

Requirement 1
                                   Hubs    Sprockets
Direct materials          $25.00   $18.00
Direct labor                 $8.40       $3.60
Overhead                  $13.20       $4.97
Unit cost                    $46.60     $26.57

Machine setups          $0.67       $0.17
Special process.         $1.25          0
General factory        $11.20       $4.80
                             $13.12       $4.97

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