Munoz Corporation uses activity-based costing to determine product costs for ext

Question

Munoz Corporation uses activity-based costing to determine product costs for external financial reports. At the beginning of the year, management made the following estimates of cost and activity in the company's five activity cost pools:
Activity cost pool Activitymeasure         EstimatedOH Cost         Expected Activity
Labor related Direct labor hours                  210000                     35,000 DLHs
Purchase orders Number or orders                72000                     900 orders
Product testing Number of test                    168000                    1,400 tests
Template Etching Number of templates        315000                    10,500 templates
General factory Machine hours                      840000                   70,000 MHS

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 acyivity were recorded as follows

Requirement 2: During the year, actual overhead cost and activity were recorded as follows: Activity Cost Pool Actual Overhead Cost Actual Activity Labor related $ 205,000 32,000 DLHs Purchase orders 74,000 950 orders Product testing 160,000 1,300 tests Template etching 338,000 11,500 relays General factory 825,000 68,000 MHs Total manufacturing overhead cost $ 1,602,000 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. (Record the transactions in the given order. Omit the "$" sign in your response.)

Explanation / Answer

2. Actual overhead cost   Actual Activity labor related             $205.000    32,000 DLHs $6.04 Purchase orders                                                                     74,000       950 0ders      77.89 Product testing                                                                       16,000        1,300test      12.30 Templating etching                                                                  338,000    11,500          29.39 General factory                                                                 825,000     68,000         68.00                     Activity cost pool Estimated OH cost/ Expected Activity Activity based overhead Rate Labor relaed Directlabor hours .21,000/ $35,000 $0.6 per labor hour Puchase orders Number or orders 72,000/ 900 80 Product testing Number of test 168,000 1,400 tests $120 Template Etching Number of templatesmpls 315,000 10,500templates $30 General factory machine hours 840,000 70,000MHS 12

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