Doctor Garage Inc. is a large manufacturer and marketer of unique, custom-made residential garage doors , as well as a major supplier of industrial and commercial doors, grilles, and counter shutters for new construction, repair, and remodel markets. Doctor Garage Inc. has developed plans for continued expansion of a network of service operations that sell, install , and service manufactured fireplaces, garage doors, and related products. Doctor Garage Inc. uses a job cost system and applies overhead to production on the basis of direct labour cost. In calculating a predetermined overhead rate for the year 2016, the company estimated manufacturing overhead to be $24 million and direct labour costs to be $20 million. In addition, the following information is available: Actual costs incurred during 2016 Direct materials used $30,000,000 Direct labour cost incurred 21,000,000 Manufacturing costs incurred during 2016 Insurance--factory 500,000 Indirect labour 7,500,000 Maintenance 1.000.000 Rent on building 11,000,000 Depreciation-equipment 2,000,000 Instructions Answer each of the following questions: (a) Why is Doctor Garage Inc. using a job-order costing system? (b) On what basis does Doctor Garage Inc. allocate its manufacturing overhead? Calculate the predetermined overhead rate for the current year. (c) Calculate the amount of the under or over-applied overhead for 2016, (d) Doctor Garage Inc. had beginning and ending balances in its work in process and finished goods accounts as follows: January 1, 2016 December 31, 2016 Work in process $ 5,000,000 $ 4,000,000 Finished goods 13,000,000 11,000,000 Determine the (1) cost of goods manufactured and (2) cost of goods sold for Doctor Garage Inc. during 2015, Assume that any under- or over-applied overhead should be included in the cost of goods sold. (e) During 2016, Job G408 was started and completed. Its cost sheet showed a total cost of $100,000, and the com- pany prices its product at 50% above its cost. What is the price to the customer if the company follows this pricing strategy