Exercise 9-47 (Algo) Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7) LaFontaine Accessories makes a variety of computer bags, carrier bags, and so on. LaFontaine uses activity-based costing for its products. The production manager has identified the following cost drivers and rates for overhead. The manufacturing facility at LaFontaine never has any work-in-process at the end of the month. Activity Centers General support Materials handling Machine setups Quality inspections Cost Drivers Number of machine-hours Direct materials cost Number of machine setups Number of inspections Rate per Cost Driver Unit $9 per machine-hour 8% of materials cost $ 4,670 per setup $ 93 per inspection Direct materials costs were $878,000 and direct labor costs were $863,000 during January, when the manufacturing facility made 750 inspections, had 36 setups, and ran the machines for 18,000 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. Materials Inventory Debit Credit Beginning Balance Ending Balance Wages Payable Debit Credit Beginning Balance Ending Balance
Exercise 9-47 (Algo) Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7) LaFontaine Accessories makes a variety of computer bags, carrier bags, and so on. LaFontaine uses activity-based costing for its products. The production manager has identified the following cost drivers and rates for overhead. The manufacturing facility at LaFontaine never has any work-in-process at the end of the month. Activity Centers General support Materials handling Machine setups Quality inspections Cost Drivers Number of machine-hours Direct materials cost Number of machine setups Number of inspections Rate per Cost Driver Unit $9 per machine-hour 8% of materials cost $ 4,670 per setup $ 93 per inspection Direct materials costs were $878,000 and direct labor costs were $863,000 during January, when the manufacturing facility made 750 inspections, had 36 setups, and ran the machines for 18,000 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. Materials Inventory Debit Credit Beginning Balance Ending Balance Wages Payable Debit Credit Beginning Balance Ending Balance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 9-47 (Algo) Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7)
LaFontaine Accessories makes a variety of computer bags, carrier bags, and so on. LaFontaine uses activity-based costing for its
products. The production manager has identified the following cost drivers and rates for overhead. The manufacturing facility at
LaFontaine never has any work-in-process at the end of the month.
Activity Centers
General support
Materials handling
Machine setups
Quality inspections
Cost Drivers
Number of machine-hours
Direct materials cost
Number of machine setups
Number of inspections
Rate per Cost Driver Unit
$9 per machine-hour
8% of materials cost
$ 4,670 per setup
$ 93 per inspection
Direct materials costs were $878,000 and direct labor costs were $863,000 during January, when the manufacturing facility made 750
inspections, had 36 setups, and ran the machines for 18,000 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.
Materials Inventory
Debit
Credit
Beginning Balance
Ending Balance
Wages Payable
Debit
Credit
Beginning Balance
Ending Balance
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