Hello question is attached, thanks. Southwest Components recently switched to activity-based costing from the department allocation method. The FabricationDepartment manager has estimated the following cost drivers and rates:Rate perCost Driver UnitActivity CentersMaterials handlingQuality inspectionsMachine setupsRunning machinesCost DriversPounds of material handled$36 per poundNumber of inspectionsNumber of machine setupsNumber of machine-hours450 per inspection$5,400 per setup$$45 per hourDirect materials costs were $600,000 and direct labor costs were $300,000 during July, when the Fabrication Department handled3,000 pounds of materials, made 500 inspections, had 25 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.

Activity based costing system: It is precise method of allocation of overhead to the products. Under…

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: Rate per Cost Driver Unit $ 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 36 per pound $ 450 per inspection $5,400 per setup $ 45 per hour Direct materials costs were $600,000 and direct labor costs were $300,000 during July, when the Fabrication Department handled 3,000 pounds of materials, made 500 inspections, had 25 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.