[trish_cantu]

Job costing, normal and actual costing. Anderson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support).

Direct labor-hours is the allocation base for assembly support costs. In December
2006, Anderson budgets 2007 assembly-support costs to be $8,000,000 and 2007 direct labor-hours to be160,000.

At the end of 2007, Anderson is comparing the costs of several jobs that were started and completed in 2007.

Laguna Model Mission Model
_________________________________________________
Construction period Feb–June 2007 May–Oct 2007
Direct materials $106,450 $127,604
Direct labor $36,276 $41,410
Direct labor-hours 900 1,010

Direct materials and direct labor are paid for on a contract basis. The costs of each are known when direct
Materials are used or when direct labor-hours are worked. The 2007 actual assembly-support costs were$6,888,000, and the actual direct labor-hours were 164,000.

1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate.
Why do they differ?

2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing?

[xaty88]

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... :D