ABC Upholstery uses a job-order costing system to accumulate manufacturing costs. The companys work-in-process on Dec. 31, 2015, consisted of one job (Job 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.

ABC applies manufacturing overhead to production on the basis of direct-labour cost. Budgeted totals for 2016 for direct labour and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow:

Direct material used $ 5,600,000

Direct labour $ 4,350,000

Indirect material used $ 65,000

Indirect labour $ 2,860,000

Factory depreciation $ 1,740,000

Factory insurance $ 59,000

Factory utilities $ 830,000

Selling & Administrative expenses $ 2,160,000

Total $17,664,000

Job 2077 was completed in January 2016; there was no work-in-process at year end. All jobs produced during 2016 were sold with the exception of Job 2143, which contained direct-material costs of $156,000 and direct-labour charges of $85,000. The company charges any under- or overapplied overhead to cost of goods sold.

REQUIRED:

Determine the companys predetermined overhead application rate.

Determine the additions to the Work-in-process inventory account for direct material used, direct labour and manufacturing overhead.

Compute the amount the company would disclose as finished-goods inventory on the December 31, 2016, balance sheet.

Compute the amount of under- or overapplied overhead at year-end.

Determine the companys 2016 cost of goods sold.

Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.