Problem 4-20 Predetermined Overhead Rate; Disposition of Underapplied or Overapplied Overhead [LO4-1, LO4-4, LO4-5] Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Computer-hours Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour $ $ 87,000 1,273,000 3.90 During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Computer-hours Manufacturing overhead cost Inventories at year-end: Raw materials 60,000 1,179,000 Work in process Finished goods Cost of goods sold $ 400,000 140,000 $ 1,040,000 $ 2,710,000 Required: 1. Compute the company's predetermined overhead rate for the year. (Round predetermined overhead rate to 2 decimal places.) Overhead rate $ 18.50 per computer hour