Company use job costing system with 2 direct costs( direct material , direct labor)and 1 indirect(assembly support) direct labor hours is allocation base for assemblly support costs. In Dec2004 the company budgets assembly support costs to be 8,000,000 and direct labor hours 160,000.

Laguna Model:
Direct material $106,450
Direct labor $36,276
Direct labor hours 900

Mission Model:
Direct material $127,604
Direct labor $41,410
Direct labor hours 1,010

Dirct material and direct labor are paid for contact basis.the cost of each are know when direct material are used or direct labor hours are worked.actual assembly support costs were 6,888000 and actual direct labor hours 164,000

Required:
1- compute the budgeted and actual inderect cost rate.why do they differ?
2- what job cost of the Laguna Model and the Mission Model using normal costing and actual costing?

It's easy.. Just refers to the text book, and voilà! Anyway, this is what I have calculated:

1) a) BUDGETED INDIRECT COST RATE=BUDG. ANNUAL INDIRECT COST/BUDG. ANNUAL QUANTITY OF COST ALLOCATION BASE
= 8000000/160000
= $ 50/DIRECT MANUFACTURING LABOR HOUR

b) 6888000/164000 = $ 42/DIRECT MANUFACTURING LABOR HOUR



2) NORMAL COSTING (LAGUNA):
= DIRECT MANUFACTURING COST + MANUFACTURING OVERHEAD
= 142726 + (50x900) = $187726

NORMAL COSTING (MISSION):
= 169014 + (50x1010) = $219514

ACTUAL COSTING (LAGUNA):
= 142726 + (42x900) = $180526

ACTUAL COSTING (MISSION):
= 169014 + (42x1010) = $211434


hope this will help u...