Southwest Components

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 $ 19 per pound $ 200 per inspection $2,800 per setup $23.00 per hour Direct materials costs were $312,000 and direct labor costs were $150,000 during July, when the Fabrication Department handled 3,500 pounds of materials, made 780 inspections, had 40 setups, and ran the machines for 17,000 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. Overhead Applied: Machine Setups Overhead Applied: Running Machines Beg. bal Beg. bal. End. bal. End. bal. Work in Process (WIP) Inventory Fabrication Department Finished Goods Inventory Beg. bal Beg. bal End. bal. End. bal