Southwest Components recently switched to activity-based costing from the department allocation method. The Fabrication Department manager...

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	$	17	per pound
Quality inspections	Number of inspections	$	230	per inspection
Machine setups	Number of machine setups	$	2,900	per setup
Running machines	Number of machine-hours	$	21.00	per hour

Direct materials costs were $283,000 and direct labor costs were $154,000 during July, when the Fabrication Department handled 3,700 pounds of materials, made 720 inspections, had 50 setups, and ran the machines for 17,000 hours.

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.	0	End. bal.

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ekkarill92 answered 11 months ago

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