Norton & Associates is an interior decorating firm in Miami. The following costs were incurred in the firms project to redecorate the mayors offices:

Direct material - $12,500

Direct professional labour - $24,000

The firms budget for the year included the following estimates:

Budgeted overhead - $400,000

Budgeted direct professional labor 250,000

Overhead is applied to contracts by using a predetermined overhead rate that is based on direct professional labor cost. Actual professional labour during the year was $260,000 and actual overhead was $389,000.

You are required to:

a. determine the total cost to redecorate the mayors offices

b. calculate the under or overapplied overhead for the year.