Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:

Machine-hours 81,000 Fixed manufacturing overhead cost $ 1,272,000 Variable manufacturing overhead per computer-hour $ 3.20

During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year:

Machine-hours 50,000 Manufacturing overhead cost $ 1,021,000 Inventories at year-end: Raw materials $ 440,000 Work in process (includes overhead applied of 37,800) $ 110,000 Finished goods (includes overhead applied of 264,600) $ 1,030,000 Cost of goods sold (includes overhead applied of 642,600) $ 2,770,000

Required:

1.

Compute the companys predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

2.

Compute the underapplied or overapplied overhead for the year. (Round your intermediate calculations to 2 decimal places.)

what is the best way to solve this problem?