Question 1 (25 marks) Hang Hang Company provides interior design services to houses and apartments at the Peak. It uses a job- order 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 Administrative staff salaries Travelling expenses Other operating costs Total Total Cost $ 4,850,000 1,080,000 350,000 220,000 6,500,000 Percentage of Cost Directly Traceable to Clients (%) 85 60 85 32 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. (C) Compute the percentage of total cost Hang Hang Company will add to each job to achieve the target profits. (3 marks) (d) Determine the total cost of Peak No. 2 project. How much would Peak No. 2 be billed for services performed? (5 marks) (e) 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. (4 marks) (ii) Prepare the adjusting entry for the under- or overapplied overhead for the year. (3 marks) (1) Suggest three examples of "other operating costs" that might be directly traceable to Hang Hang Company