Savallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies to manufacture 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 85,000

Fixed manufacturing overhead cost $ 1,274,000

Variable manufacturing overhead per computer-hour $ 3.20

During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year:

Computer-hours 60,000

Manufacturing overhead cost $ 1,190,000

Inventories at year-end:

Raw materials $ 420,000

Work in process $ 150,000

Finished goods $ 1,030,000

Cost of goods sold $ 2,770,000

Required:

1. Compute the companys predetermined overhead rate for the year. (Round predetermined overhead rate to 2 decimal places.)

2. Compute the underapplied or overapplied overhead for the year. (Round predetermined overhead rate to 2 decimal places.)

3. Determine the cost of goods sold for the year after any adjustment for underapplied or overapplied overhead. (Round predetermined overhead rate to 2 decimal places.)