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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
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 81,000 1,277,000 3.70 During the year, a severe economic recession resulted in cutting back production and a buildup actual cost and operating data for the year: inventory the company's warehouse. The company's cost records revealed the following 60,000 $ 1,250,000 Computer-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process Finished goods Cost of goods sold $ $ 450,000 140,000 $ 1,030,000 $ 2,780,000 Required: 1. Compute the company's predetermined overhead rate for the year. (Round predetermined overhead rate to 2 decimal places.) Overhead rate per computer hour 2. Compute the underapplied or overapplied overhead for the year. (Round predetermined overhead rate to 2 decimal places.)
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