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3 2 points Southwest Components recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost
3 2 points Southwest Components recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost drivers and rates: Activity Centers Materials handling Quality inspections Machine setups Running machines Rate per 20 per pound Cost Drivers Pounds of material handled Number of inspections Cost Driver Unit $ $ 210 per inspection Number of machine setups Number of machine-hours $2,700 per setup $21.00 per hour eBook Print References Direct materials costs were $289,000 and direct labor costs were $130,000 during July, when the Fabrication Department handled 3,700 pounds of materials, made 710 inspections, had 50 setups, and ran the machines for 17,000 hours. Required: Use T-accounts to show the flow of materials, labor, and overhead costs from the four overhead activity centers through Work-in- Process Inventory and out to Finished Goods Inventory. Materials Inventory Wages Payable Beg. bal. Beg. bal. End. bal. End. bal. Overhead Applied: Materials Handling Overhead Applied: Quality Inspections Beg. bal. Beg. bal. End. bal. End. bal. Overhead Applied: Machine Setups Overhead Applied: Running Machines Beg. bal Beg. bal. End. bal. End. bal. Work in Process (WIP) Inventory Fabrication Department Beg. bal Finished Goods Inventory Beg. bal End. bal. End. bal.
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