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Hunter 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 companys five activity cost pools:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost	Expected Activity
Labour related	Direct labour-hours	$ 337,500	45,000 DLHs
Production orders	Number of orders	101,250	1,125 orders
Materials receipts	Number of receipts	216,000	1,800 receipts
Relay assembly	Number of relays	410,400	12,000 relays
General factory	Machine-hours	1,440,000	90,000 MHs
		$2,505,150

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:

   Activity Cost Pool	Actual Overhead Cost	Actual Activity
   Labour related	$ 318,500	48,000 DLHs
   Production orders	107,000	1,050 orders
   Materials receipts	225,000	1,950 receipts
   Relay assembly	410,400	11,850 relays
   General factory	1,470,500	91,500 MHs
   Total overhead cost	$2,531,400

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

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

   3. Page 216Prepare a journal entry to record the application of manufacturing overhead cost to work in process for the year. Post the entry to the companys manufacturing overhead T-account.

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

3. The actual activity for the year was distributed among the companys four products as in the table below.

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

   2. Does the total amount of overhead cost applied to the products above tie in to the T-accounts in any way? Explain your answer.

Activity Cost Pool	Actual Activity	Product A	Product B	Product C	Product D
Labour related	48,000 DLHs	12,000	16,500	6,000	13,500
Production orders	1,050 orders	240	300	195	315
Materials receipts	1,950 receipts	150	690	360	750
Relay assembly	11,850 relays	4,050	0	7,800	0
General factory	91,500 MHs	19,500	27,000	21,000	24,000

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