Pear Recording Inc. is a small audio recording studio. The company handles work for advertising agencies$$primarily for radio ads$$and has a few singers and bands as clients. The company handles all aspects of recording, from editing to making a digital master. The competition in the audio recording industry has always been tough, but it has been getting even tougher over the last several years. The studio has been losing customers to newer studios that are equipped with more up$-$to$-$date equipment and are able to offer very attractive prices and excellent service. Summary data concerning the last two years of operations follow $$

Year $20$X$2$ Year $20$X$3$ Estimated hours of studio service $1,000750$

Estimated studio overhead cost

$$90,000$

$$90,000$ Actual hours of studio service provided $900600$

Actual studio overhead cost incurred

$$90,000$

$$90,000$ Hours of studio service at capacity $1,8001,800$

The company applies studio overhead to recording jobs based on the hours of studio service provided. For example, $30$ hours of studio time were required to record, edit, and master the $$Swifty$$ album for a local band. All of the studio overhead is fixed, and the actual overhead cost incurred was exactly as estimated at the beginning of the year in both $20$X$2$ and $20$X$3.$

Required $$

$1.$ The company computes their predetermined overhead rate at the beginning of each year based on the estimated studio overhead and the estimated hours of studio service for the year. How much overhead would have been applied to the $$Swifty$$ job if it had been done in $20$X$2?$ In $20$X$3?$ By how much would overhead have been underapplied or overapplied in $20$X$2?$ In $20$X$3?$

$2.$ The president of Pear Recording has heard that some companies in the industry have changed to a system of computing the predetermined overhead rate at the beginning of each year based on the estimated studio overhead for the year and the hours of studio service that could be provided at capacity. She would like to know what effect this method would have on job costs. How much overhead would have been applied using this method to the $$Swifty$$ job if it had been done in $20$X$2?$ In $20$X$3?$ By how much would overhead have been underapplied or overapplied in $20$X$2$ using this method? By how much in $20$X$3?$