Question

Catalina Sails makes sails for small sailboats. It recently switched to activity-based costing from the department product costing method. The manager of Department Y, which manufactures the sails, has identified the following cost drivers and rates for overhead: Activity Centers Cost Drivers Rate per Cost Driver Unit Materials handling Yards of material handled $ 0.65 per yard Quality inspections Number of inspections $ 110 per inspection Machine setups Number of machine setups $ 900 per setup Running machines Number of machine-hours $ 12 per hour Direct materials costs were $195,000 and direct labor costs were $104,000 during October, when Building S handled 37,100 yards of materials, made 700 inspections, had 100 setups, and ran the machines for 19,600 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.

Answer 1

Calculated as: