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Question: Catalina Sails makes sails for small sailboats. It...

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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	Cost Drivers	Rate per Cost Driver Unit
Materials handling	Yards of material handled	$	1.20	per yard
Quality inspections	Number of inspections	$	80	per inspection
Machine setups	Number of machine setups	$	1,000	per setup
Running machines	Number of machine-hours	$	11	per hour

Direct materials costs were $181,000 and direct labor costs were $110,000 during October, when Building S handled 39,100 yards of materials, made 700 inspections, had 90 setups, and ran the machines for 20,000 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.

Materials Inventory Wages Payable Beg. bal. Beg. bal. Finished goods inventory End. bal. End. bal. Overhead Applied: Materials Handling Overhead Applied: Quality Inspections Beg. bal. Beg. bal. End. bal. End. bal. Overhead Applied: Machine Setups Overhead Applied: Running Machines Beg. bal Beg. bal. End. bal. End. bal. Work in Process (WIP) Inventory Fabrication Department Finished Goods Inventory Beg. bal Beg. bal 0

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