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 $ 20 per pound Quality inspections Number of inspections $ 220 per inspection Machine setups Number of machine setups $ 2,500 per setup Running machines Number of machine-hours $ 21.00 per hour Direct materials costs were $299,000 and direct labor costs were $146,000 during July, when the Fabrication Department handled 3,500 pounds of materials, made 710 inspections, had 50 setups, and ran the machines for 17,000 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.
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