Speedy Auto Repairs uses job$-$order costing. Its direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics$$ hourly wages. Speedy$$s overhead costs include various items, such as the shop manager$$s salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room.

The company applies all of its overhead costs to jobs based on direct labor$-$hours. At the beginning of the year, it made the following estimates:

Direct labor$-$hours required to support estimated output $36,000$

Fixed overhead cost $ $540,000$

Variable overhead cost per direct labor$-$hour $$1,000$