Cost Flows under Activity-Based Costing; Partial T-Accounts Products, Inc. , installed an activity-based costing system several years ago. The company manufactures four products in a single facility and has identified five major activity centers relating to manufacturing overhead. As shown in the following T-accounts, direct materials and direct labor costs for the current year have been added to Work in Process. However, no entries have been made for either actual or applied manufacturing overhead cost.

At the beginning of the year, the company made the following estimates of cost and activity in the five activity centers for the purpoose of computing predetermined overhead rates:

Work in Process Labor-Related Activity Center 2,530,000 410,000 Purchase Orders Activity Center DM DL MO Manufacturing Overhead Product Testing Activity Center Template Etching Activity Center General Factory Activity Center Estimated Overhead Activity Center Cost Driver Cost Expected Activity Labor related ........ Direct labor-hours $280,000 40,000 direct labor-hours Purchase orders ... . Number of orders 96,000 1,200 orders Product testing ....... Number of tests 420.000 3.500 tests Template etching...... Number of templates 315,000 10,500 templates General factory ....... Machine-hours 810,000 90,000 machine-hours 1. Compute the predetermined overhead rate for each activity center for the year. 2. During the year, actual manufacturing overhead cost and actual activity were recorded in the five activity centers as follows: Activity Center Labor related ............ Purchase orders........ Product testing Template etching ......... General factory ......... Total overhead cost .... Actual Overhead Cost $ 272,000 98,000 415,000 330,000 801.000 $1,916,000 Actual Activity 37,000 direct labor-hours 1,250 orders 3,400 tests 11.500 templates 87,000 machine-hours a. Prepare a journal entry to record the incurrence of the total actual manufacturing overhead cost for the year (credit Accounts Payable). b. Prepare T-accounts for Manufacturing Overhead and for each of the activity cen- ters, and post the entry in (2)(a) above to these accounts. Label this as entry (a). 3. Refer again to the actual activity" data in (2) above. a. Determine the amount of overhead cost applied to production for the year. In deter- mining this amount, remember that you have five predetermined overhead rates, rather than just one. b. Prepare a journal entry to record the amount of applied overhead cost for the year. Label this as entry (b), and post the entry to the Manufacturing Overhead and activ- ity center T-accounts. 4. Determine the amount of underapplied or overapplied manufacturing overhead cost for the year for each activity center and for Manufacturing Overhead