PROBLEM 3-22 Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Over- head [LO3-1, LO3-7) 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 basisof machine-hours. The following estimate at the beginning of the year s were used in preparing the predetermined overhead rate Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour... 75,000 . . . . .....$795,000 $1.40 During the year, a glut 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 follow- ing actual cost and operating data for the year: Machine-hours 60,000 $850,000 Inventories at year-end: Raw materials .. Work in process (includes overhead applied of 36,000) Finished goods (includes overhead applied of 180,000) $30,000 $100,000 $500,000 $1,400,000 .. .. Cost of goods sold (includes overhead applied of 504,000)