Lifestyle Roofing uses job order costing and applies manufacturing overhead to individual projects using predetermined overhead rates. In the Installation Division, overhead is applied on the basis of direct labour hours, and in the Disposal Division, overhead is applied on the basis of debris tonnage hauled to the landfill. At the beginning of the current year, management made the following budget estimates to determine overhead application rates.

Annual Estimates Direct labor Manufacturing overhead Direct labor hours Tons of Debris Installation Disposal $750,000 $120,000 $100,000 $36,000 25,000 10,000 0 300 Job #652 for Bees Grocery measured 8,348 square-feet. The job was started and completed in May. Information pertaining to this project is provided below. Installation Disposal Job no. 652 (8,348 square-feet): Cost of material used on job $30,000 $1,000 Direct labor cost $7,800 $1,100 Direct labor hours 250 80 Tons of debris 0 7

Instructions: a. Determine the overhead rate that should be used by each division in applying overhead costs to job #652. (4 marks)

b. What was the total cost of job #652 and what was its cost per square-foot? ( 6 marks)

c. Prepare the journal entries required to record the sale (on account) of job #652 to Bees Grocery. The total sales price was $60,000.

d. Assume that the actual overhead costs for the year were $98,000 in the Installation Division, and $41,000 in the Disposal Division. Assume also that the actual direct labor hours used by the Installation Division were 24,000, and actual debris tonnage removed by the Disposal Division totalled 312 tons for the year. In the basis of this information, determine the over or under applied overhead in each division of the year.