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Problem 3-22 Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead [LO3-1, LO3-7] Luzadis Company makes furniture using the latest automated technology. The company uses
Problem 3-22 Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead [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 basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:
89,000 1,273,000 Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour $ 3.50 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 following actual cost and operating data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end 40,000 $ 755,000 Raw materials Work in process (includes overhead applied of 28,480) Finished goods (includes overhead applied of 156,640) $ 430,000 $ 110,000 $1,040,000 $ 2,780,000 Cost of goods sold (includes overhead applied of 526,880) Required: 1. Compute the company's predetermined overhead rate for the year. (Round your answer to 2 decimal places.) redetermined overhead rate per hour 2. Compute the underapplied or overapplied overhead for the year. (Round your intermediate calculations to 2 decimal places.)
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