Exercise y$-40($AIgo$)$ Activity$-*$ased Costing: Cost rlows tnrougn I$-$Accounts $($LU y$-$b$,$ I$)$

Heintz Products uses activity$-$based costing to account for product costs. The plant manager has estimated the following cost drivers and rates.

Activity Centers Materials inspection

Equipment maintenance Machine setups Packing and shipping

Cost Drivers Direct materials cost Machine$-$hours Number of production runs

Pounds of finished output

Rate per Cost Driver Unit $15\%$ of materials cost

$$19$ per machine$-$hour

$$6,370$ per setup

$$4\mathrm{.}20$ per pound

Direct materials costs were $$508,000$ and direct labor costs were $$348,000$ during November, when the plant finished $7,000$ pounds of product, had $20$ setups, and ran the machines for $15,000$ hours. There were no work$-$in$-$process inventories.

Required:

Use T$-$accounts to show the flow of materials, labor, and overhead costs from the four overhead activity centers through Work$-$inProcess 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.