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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:

Direct materials costs were $281,000 and direct labor costs were $138,000 during July, when the Fabrication Department handled 3,700 pounds of materials, made 710 inspections, had 50 setups, and ran the machines for 14,000 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.

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 $ 17 per pound $ 220 per inspection $2,700 per setup $23.00 per hour Materials Inventory Wages Payable Beg. bal. Beg. bal. End, bal. End, bal. Direct labor Direct materials Finished goods inventory Machine setup OH Manufacturing OH Material handling OH Overhead Applied: Materials Handli 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