Fine & Associates is an interior decorating firm in Tucson. The following costs were incurred in a project to redecorate the mayor's offices:
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Direct material
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$ 29,000
|
|
Direct professional labor
|
42,000
|
The firm's budget for the year included the following estimates:
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Budgeted overhead
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$800,000
|
|
Budgeted direct professional labor
|
640,000
|
Overhead is applied to contracts by using a predetermined overhead rate that is based on direct professional labor cost. Actual professional labor during the year was $655,000 and actual overhead was $793,000.
Required:
A. Determine the total cost to redecorate the mayor's offices.
B. Calculate the under- or overapplied overhead for the year. Be sure to label your answer.