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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: Rate

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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: Rate per Cost Driver Unit Activity Centers Materials handling Quality inspections Machine setups Running machines Cost Drivers Pounds of material handled Number of inspections Number of machine setups Number of machine-hours $ 16 per pound $220 per inspection $2,900 per setup $21.00 per hour Direct materials costs were $306,000 and direct labor costs were $154,000 during July, when the Fabrication Department handled 3,700 pounds of materials, made 720 inspections, had 40 setups, and ran the machines for 13,000 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

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