Midterm #1 - Question #2 Len-Tel Company has a job-order costing system and applies manufacturing overhead cost to products based on machine hours. The following estimates were used in preparing the predetermined overhead rate for the most recent year: Machine hours 100,000 Manufacturing overhead cost $2,000,000 During the most recent year, a severe recession in the company's industry caused the curtailment of production and a buildup of inventory in the company's warehouses. The company's cost records revealed the following actual cost and operating data for the year: Machine hours 80,000 Manufacturing overhead cost $1,845,000 Amount of applied overhead in inventories at year-end: Work in process $200,000 Finished goods $350,000 $1,450,000 Amount of applied overhead in cost of goods sold for the year Required: a. Compute the company's predetermined overhead rate for the year and the amount of underapplied or overapplied overhead for the year