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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 Cost Drivers Pounde of saterial handled unber of inapectione Munber of nachine setupe uber of achine-bours ate per Cont Driver it per pound 450 per inepection 5,400 per setup 45 per hour Activity Centers Quality inapections Machine setupe huseing sachines 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 S00 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 trom the four overhead activity centers through Work-in- Process Inventory and out to Finished Goods inventory. Materials inventory Wages Payable Bng be Deg b End be End be Overhead Apped Materials Handing Overhead Appled Quality inpection Ce b Deg te End be End be Overtead Appled Machine Betups Overhead Applied Running Machines Deg ba Deg be End Se End be Work in Process (wP) ventery Fabrication Departant Finished Goods Invenory

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 Cost Drivers Pounde of saterial handled unber of inapectione Munber of nachine setupe uber of achine-bours ate per Cont Driver it per pound 450 per inepection 5,400 per setup 45 per hour Activity Centers Quality inapections Machine setupe huseing sachines 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 S00 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 trom the four overhead activity centers through Work-in- Process Inventory and out to Finished Goods inventory. Materials inventory Wages Payable Bng be Deg b End be End be Overhead Apped Materials Handing Overhead Appled Quality inpection Ce b Deg te End be End be Overtead Appled Machine Betups Overhead Applied Running Machines Deg ba Deg be End Se End be Work in Process (wP) ventery Fabrication Departant Finished Goods Invenory

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 7E: The management of Nova Industries Inc. manufactures gasoline and diesel engines through two...
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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.
Required: Use T-eccounts 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. Wages Payable Materials Inventory Beg bal Beg. bal End. bal End bal Overhead Applied Materials Handling Overhead Applied: Quality Inspections Beg ba Beg ba End. bal End. ba Overhead Applied: Machine Setups Overhead Applied: Running Machines Beg ba Deg ba End ba End ba Work in Process (WIP) Inventory Fabrication Department Finished Goods Inventory Beg ba Beg ba End ba End ba
Transcribed Image Text:Required: Use T-eccounts 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. Wages Payable Materials Inventory Beg bal Beg. bal End. bal End bal Overhead Applied Materials Handling Overhead Applied: Quality Inspections Beg ba Beg ba End. bal End. ba Overhead Applied: Machine Setups Overhead Applied: Running Machines Beg ba Deg ba End ba End ba Work in Process (WIP) Inventory Fabrication Department Finished Goods Inventory Beg ba Beg ba End ba End ba
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 Activity Centers Materials handling Quality inspections Machine setupa Cost Drivers Pounds of material handled Number of inspectione Munber of machine setupa Cont Driver Unit $ 36 per pound $450 per inspection $5,400 per setup 45 per hour Running nachines Number of nachine-hours 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 bal End be End ba Overhead Applied Materials Handling Overhead Applied Quality Inspections Beg ba Deg ba End bal End ba Overhead Applled: Machine Setups Overhead Applied: Running Machines Beg ba Beg ba End ba End ba Work in Process (WIP) inventery Fabrication Department Finished Goods Inventory
Transcribed Image Text: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 Activity Centers Materials handling Quality inspections Machine setupa Cost Drivers Pounds of material handled Number of inspectione Munber of machine setupa Cont Driver Unit $ 36 per pound $450 per inspection $5,400 per setup 45 per hour Running nachines Number of nachine-hours 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 bal End be End ba Overhead Applied Materials Handling Overhead Applied Quality Inspections Beg ba Deg ba End bal End ba Overhead Applled: Machine Setups Overhead Applied: Running Machines Beg ba Beg ba End ba End ba Work in Process (WIP) inventery Fabrication Department Finished Goods Inventory
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