Sylvan Company uses activity-based costing to determine product costs for external financial reports. Some of the entries have been completed to the manufacturing overhead account for the current year, as shown by entry (a) below:
Required:
1. What does entry (a) represent?
2. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools:
Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools.
3. During the year, actual activity was recorded as follows:
Activity Cost Pool Actual Activity
Labour related…………………………………………………..41,000 DLHs
Purchase orders………………………………………………..1,300 orders
Parts management……………………………………………420 part types
Board etching……………………………………………………2,150 boards
General factory…………………………………………………82,000 MHs
Determine the amount of manufacturing overhead cost applied to production for the year.
4. Determine the amount of underapplied or overapplied overhead cost for the year.
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