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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

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 Cost Drivers Rate per Cost Driver Unit
Materials handling Pounds of material handled $ 18 per pound
Quality inspections Number of inspections $ 230 per inspection
Machine setups Number of machine setups $ 2,700 per setup
Running machines Number of machine-hours $ 22.00 per hour

Direct materials costs were $313,000 and direct labor costs were $163,000 during July, when the Fabrication Department handled 3,700 pounds of materials, made 770 inspections, had 50 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.

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