Problem $3-12($Algo$)$ Predetermined Overhead Rate; Disposing of Underapplied or Overapplied Overhead $[$LO$3-4]$

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 predetermined overhead rate was based on a cost formula that estimates $$1,068,000$ of total manufacturing overhead for an estimated activity level of $89,000$ machine$-$hours.

During the year, a large quantity of furniture on the market resulted in cutting back production and a bulldup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year:

Machine$-$hours

Manufacturing overhead cost

$\backslash$table$[[,74,000],[$$$,1,029,000$