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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 Activity

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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 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 Rate per Cost Driver Unit 3 36 per pound 5 450 per inspection 55,400 per setup $45 per hour Direct materials costs were $600,000 and direct labor costs were $300.000 during July, when the Fabrication Department handled 3,000 pounds of materials, made 500 inspections, had 25 setups, and ran the machines for 10,000 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 bol End ball Endal Overhead Applied Material Handling Overhead Applied: Quality Inspections Beg bal Beg End, bal End bal Overhead Applied Machine Setup Overhead Applie: Running Machines Beg bal Beghal End bal El bal Work in Process (WIP) Inventory Fabrication Department Fished Goods Inventory Beg bol tleg bal End, End tal

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