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...

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 the 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-order cost system and applies overhead to production on the basis of direct labour cost. In calculating a predetermined overhead rate for the year 2020, 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 2020Direct materials used - $30000000Direct labour cost incurred - 21,000,000Manufacturing costs incurred during 2020Insurance-factory - $500000Indirect labour- $7,500,000Maintenance - $1000000Rent on building - $11000000Depreciation equipment - $2000000InstructionsAnswer 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 2020.