Munoz Corporation uses ABC to determine product costs for external financial reports. At the beginning of the year, management made the following cost and activity estimates in the company?s five activity cost pools:

Required:

1. Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools.

2. During the year, actual overhead cost and activity were recorded as follows:

a. Prepare a journal entry to record the incurrence of actual manufacturing overhead cost for the year (credit accounts payable). Post the entry to the company?s manufacturing overhead T-account.

b. Determine the amount of overhead cost applied to production during the year.

c. Prepare a journal entry to record the application of manufacturing overhead cost to work in process for the year. Post the entry to the company?s manufacturing overhead T-account.

d. Determine the amount of underapplied or overapplied manufacturing overhead for the year.

3. The actual activity for the year was distributed among the company?s four products as follows:

a. Determine the total amount of overhead cost applied to each product.

b. Does the total amount of overhead cost applied to the products above relate to the T-accounts in any way? Explain.

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Estimated Activity Cast Pool Labour related Expected Activity Activity Measure Overhead Cost Direct labour-hours $ 214,200 29,750 DLHS Purchase orders Number of orders 55,080 765 orders Number of tests Product testing 121,380 1,200 tests 321,300 Template etching Number of templates 8,950 templates General factory Machine-hours 59,500 MHs 892,500 $1,604,460 Activity Cost Pool Actual Overhead Cost Actual Activity Labour related $ 202,130 30,200 DLHS Purchase orders 56,610 760 orders Product testing 122,400 1,105 tests Template etching 316,030 8,775 templates General factory 911,625 57,800 MHs Total overhead cost $1,608,795