Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.

The company uses a job$-$order costing system that applies overhead to jobs based on direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $$85,500$ of manufacturing overhead for an estimated activity level of $$45,000$ direct labor dollars. The beginning inventory balances were as follows:

$\backslash$table$[[$Raw materials,$$10,200$