Exercise 9 33 Activity Based Costing Cost Flows through T Accounts (LO 9 5, 7) Delta Parts, Inc , 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 Cost Drivers Rate per Cost Driver Unit Materials handling Pounds of material handled $ 18 per pound Quality inspections Number of inspections $ 200 per inspection Machine setups Number of machine setups $ 2,800 per setup Running machines Number of machine hours $ 24 00 per hour Direct materials costs were $291,000 and direct labor costs were $133,000 during July, when the Fabrication Department handled 4,000 pounds of materials, made 790 inspections, had 30 setups, and ran the machines for 15,000 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 Use the accounts Materials Inventory, Wages Payable, Work in Process Inventory, Finished Goods Inventory, and four overhead applied accounts

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Exercise 9-33 Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7) Delta Parts, Inc., recently switched to activity-based costing from the department allocation method. The

Exercise 9-33 Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7)

Delta Parts, Inc., 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	Cost Drivers	Rate per Cost Driver Unit
Materials handling	Pounds of material handled	$	18	per pound
Quality inspections	Number of inspections	$	200	per inspection
Machine setups	Number of machine setups	$	2,800	per setup
Running machines	Number of machine-hours	$	24.00	per hour

Direct materials costs were $291,000 and direct labor costs were $133,000 during July, when the Fabrication Department handled 4,000 pounds of materials, made 790 inspections, had 30 setups, and ran the machines for 15,000 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. Use the accounts Materials Inventory, Wages Payable, Work-in-Process Inventory, Finished Goods Inventory, and four overhead applied accounts.