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 | 87,000 | |
| Fixed manufacturing overhead cost | $ | 1,274,000 |
| Variable manufacturing overhead per computer-hour | $ | 3.60 |
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During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company’s warehouse. The |
| Computer-hours | 50,000 | |
| Manufacturing overhead cost | $ | 994,000 |
| Inventories at year-end: | ||
| Raw materials | $ | 410,000 |
| Work in process | $ | 180,000 |
| Finished goods | $ | 1,050,000 |
| Cost of goods sold | $ | 2,740,000 |
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2.
Compute the underapplied or overapplied overhead for the year. (Round your intermediate calculations to 2 decimal places and final answer
to the nearest dollar amount. Input the amount as a positive value. Omit the “$” sign in your response.)
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