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		81,000
Fixed manufacturing overhead cost	$	1,274,000
Variable manufacturing overhead per computer-hour	$	3.90

During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company