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Problem 3 - 1 2 ( Algo ) Predetermined Overhead Rate; Disposing of Underapplied or Overapplied Overhead [ LO 3 - 4 ] Luzadis Company
Problem Algo Predetermined Overhead Rate; Disposing of Underapplied or Overapplied Overhead LO
Luzadis Company makes furniture using the latest automated technology. The company uses a joborder costing system and applies manufacturing overhead cost to products on the basis of machinehours. The predetermined overhead rate was based on a cost formula that estimates $ of total manufacturing overhead for an estimated activity level of machinehours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year:
tableMachinehours,Manufacturing overhead cost,$
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