Catalina Salls makes salls for small sallboats. 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 Materials handling Quality inspections Machine setups Running machines Direct materials costs were $159,000 and direct labor costs were $106,000 during October, when Department Y handled 42,600 yards of materials, made 600 Inspections, had 100 setups, and ran the machines for 22,400 hours. Beg. bal. 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. End. bal. Beg. bal. End. bal. Beg. bal Cost Drivers Yards of material handled Number of inspections Number of machine setups Number of machine-hours End. bal. Beg. bal Materials Inventory Rate per Cost Driver Unit $0.55 per yard $90 per inspection $ 800 per setup $10 per hour Overhead Applied: Materials Handling Overhead Applied: Machine Setups Work in Process (WIP) Inventory Department Y Beg. bal. End. bal. Beg. bal. End. bal. Beg. bal. End, bal. Beg. bal Wages Payable Overhead Applied: Quality Inspections Overhead Applied: Running Machines Finished Goods Inventory
Catalina Salls makes salls for small sallboats. 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 Materials handling Quality inspections Machine setups Running machines Direct materials costs were $159,000 and direct labor costs were $106,000 during October, when Department Y handled 42,600 yards of materials, made 600 Inspections, had 100 setups, and ran the machines for 22,400 hours. Beg. bal. 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. End. bal. Beg. bal. End. bal. Beg. bal Cost Drivers Yards of material handled Number of inspections Number of machine setups Number of machine-hours End. bal. Beg. bal Materials Inventory Rate per Cost Driver Unit $0.55 per yard $90 per inspection $ 800 per setup $10 per hour Overhead Applied: Materials Handling Overhead Applied: Machine Setups Work in Process (WIP) Inventory Department Y Beg. bal. End. bal. Beg. bal. End. bal. Beg. bal. End, bal. Beg. bal Wages Payable Overhead Applied: Quality Inspections Overhead Applied: Running Machines Finished Goods Inventory
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text: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
Materials handling
Quality inspections
Machine setups
Running machines
Direct materials costs were $159,000 and direct labor costs were $106,000 during October, when Department Y handled 42,600 yards
of materials, made 600 inspections, had 100 setups, and ran the machines for 22,400 hours.
Beg. bal.
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.
End. bal.
Beg. bal.
End. bal.
Beg. bal
Cost Drivers
Yards of material handled
Number of inspections
Number of machine setups
Number of machine-hours
End. bal.
Beg. bal
Materials Inventory
Rate per
Cost Driver Unit
$0.55 per yard.
$90 per inspection
$800 per setup
$10 per hour
Overhead Applied: Materials Handling
Overhead Applied: Machine Setups
Work in Process (WIP) Inventory Department Y
Beg. bal.
End. bal
Beg. bal.
End. bal.
Beg. bal.
End. bal.
Beg. bal
Wages Payable
Overhead Applied: Quality Inspections
Overhead Applied: Running Machines
Finished Goods Inventory
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