Fine & Associates is an interior decorating firm in Tucson. The following costs were incurred in a project to redecorate the mayor's offices:

Direct material ...........................................................$ 29,000

Direct professional labor ........................................... 42,000

The firm's budget for the year included the following estimates:

Budgeted overhead ...............................................$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.