Hang Hang Company provides interior design services to houses and apartments at the Peak. It uses a joborder system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by Hang Hang Company, but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup. In 2019, the accountant of Hang Hang Company prepared the following budget for 2020:

Professional designers'salaries 4,850,000 85 %

Administrative staff salaries 1,080,000 60%

Travelling expenses 350,000 85 %

Other operating costs 220,000 32 %

Total 6,500,000

There was no work in process at the beginning of January 2020. The partners of Hang Hang Company desire to make a $1,300,000 profit for the firm and plan to add a percentage markup on total cost to achieve the target profit. On 31 October 2020, Hang Hang Company completed work on a project for Peak No. 2. The costs incurred in relation to this project were: professional designers' salaries, $235,000; administrative staff salaries, $55,000; travelling expenses, $17,000; and other operating costs, $15,000.

Question:

Actual manufacturing overhead by year-end totaled $1,500,000. Assume the applied overhead equals to the budgeted overhead. Hang Hang Company adjusts all under- and overapplied overhead to cost of goods sold.

(i) Does the presence of under- or overapplied overhead at year-end indicate that the accountant made a serious error? Explain.

(ii) Prepare the adjusting entry for the under- or overapplied overhead for the year.

(iii) Suggest three examples of "other operating costs" that might be directly traceable to Hang Hang Company.