Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 36

Activity-Based Costing: Cost Flows through T-Accounts
Delta Parts, Inc., 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 $300,000 and direct labor costs were $150,000 during July, when the Fabrication Department handled 3,750 pounds of materials, made 750 inspections, had 40 setups, and ran the machines for 15,000 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.