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:

Direct materials costs were $550,000 and direct labor costs were $275,000 during October, when Department Y handled 20,000 yards of materials, made 400 inspections, had 50 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. Use the accounts Materials Inventory, Wages Payable, Work-in-Process Inventory, Finished Goods Inventory, and four overhead applied accounts.

Transcribed Image Text:

Rate per Cost Driver Unit Activity Centers Materials handling....... . . . .. Cost Drivers Yards of material handled $3 per yard Quality inspections.... Machine setups....... . . . . Number of machine setups $%2,400 per setup Running machines . . . . . .. Number of machine-hours $30 per hour $300 per inspection